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Written by rosalind renshaw

A growing ‘wait and see’ mentality is behind falling transactions in London, Chesterton Humberts has said.

The firm says that transaction volumes have continued to fall despite the increased availability of residential properties.

It blames a mismatch between sellers’ and buyers’ expectations, plus uncertainty over whether some form of mansion tax will be introduced, and what an announcement will say over the ownership of £2m-plus homes by ‘non-natural persons’.
 
During the third quarter, transaction volumes in central London fell 3.6% on the previous quarter although stock levels were up 13.5%.

It said both buyers and sellers are confused by the combination of a lack of clarity over proposed tax legislation, a constrained mortgage market and wider economic uncertainties.
 
Nick Barnes, head of research, said: “Sellers are willing and able to hang on until prices rise to an acceptable level and so are reluctant to adjust asking prices; whilst buyers bide their time until the ‘right property’ at the ‘right price’ becomes available, thereby reducing market liquidity.

“Combined with a more protracted due diligence procedure from both solicitors and banks, this is adding to the general uncertainty about the future and holding transaction activity back.”
 
Chesterton Humberts said the Mortgage Market Review may dampen demand further.

See today’s blog.

Comments

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    An astute summary of the gap between sellers expectations and what buyers are prepared to pay today - illustrated well perhaps by the 3.5% increase in Rightmoves monthly asking price index and the 0.7% fall quoted by Halifax yesterday.

    Looking at transaction volumes, these are of course much lower than 2007/8 but I can't see a noticeable fall off over the past few months either in London or across the UK. (See "Homes sold in the UK' graph on my Month in Numbers - http://henrypryor.com/blog/2012/10/month-in-numbers-september-2012/).

    What may make things harder are the predictions for 2013 of falling prices leaving some buyers worried about committing today to something that they believe will be cheaper tomorrow.

    • 07 November 2012 11:55 AM
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