Homes in central parts of London sold for a typical 11.5 per cent below asking price in the first three months of this year - and there may be worse to come if there is a glut of sellers taking the plunge after Brexit has achieved some sort of resolution.
That’s the warning in a downbeat market report from Cluttons.
"There has been a lot of discussion about the recovery of the London property market once there’s a resolution to Brexit. This simply won’t be the case. There’s effectively three years’ worth of people who haven’t put their house on the market, creating a ‘Brexit bottleneck’ which will lead to a sharp correction when they do” warns James Hyman, Cluttons’ head of residential.
"If people are serious about selling, they should market their properties now to beat the rush of supply. However, they do need to be realistic about the price - nothing has changed in terms of affordability. Buyers haven't suddenly got bigger salaries and they still must contend with the tighter lending criteria imposed by [mortgage lenders].”
Hayman’s comments come in a report that says London’s buyers and sellers are currently watching and waiting for clarity over Brexit.
Specifically Cluttons reports that annual price growth across London during January, February and March was at its lowest level since 2009, with properties selling for an average 11.5 per cent discount on asking price.
Sales volumes during that quarter were down 4.3 per cent on a year ago.
New supply to the market in what Cluttons describes as “central and core” London areas during the first quarter was at its lowest level in a decade; this was 35 per cent lower than the level experienced in the same period last year, and 40 per cent lower than the five-year average.
Although remaining low, sales volumes across Prime Central London remained stable.
Meanwhile Central London prices are expected to drop further this year - Cluttons predicts a 3.0 per cent drop by the end of 2019, although it says confidence it likely to return post-Brexit and it believes that London’s housing market performance may outstrip the rest of the UK in the 2020, 2021 and 2022 years.
"We are beginning to see more activity out there but only at the right price” notes Hayman.
“Sellers who are prepared to price their properties sensibly will get offers. For example, we marketed three properties last week at 15 to 20 per cent lower than the original price – within 48 hours we had multiple offers.”