London asking prices drop 2.9% in a month – but it’s just the Summer lull

Fully in line with the normal Summertime lull, says Rightmove

A 1.2% drop in the average asking price of new properties coming to market last month is fully in line with the normal Summertime lull, says Rightmove, as the portal dismisses most of the Brexit jitters.

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July’s seen asking prices dip by an average of 1.2% for the last six years, as holiday season kicks in, but this year’s slip “follows on seamlessly from Brexit uncertainty”, notes Rightmove, with higher-value properties in London and South East bearing the brunt of the slowdown.

Large properties are taking longer to sell – sticking on Rightmove for an average of 74 days before being marked Sold Subject to Contract – as well as suffering the biggest drops in asking prices (-2.9% in the last month; 2010 and 2014 both saw bigger drops); first-time buyer and second-stepper type property are out-performing.time-to-sell-London-2time-to-sell-national-3

Westminster and RBKC saw really quite dramatic tumbles in asking prices last month, of -14.5% and -12.5% respectively. Westminster’s now seen asking prices tank by over 24% year-on-year. Although stats in this part of town can be heavily skewed by the launch of just one or two super-prime developments.

The trend is clear across geographies, with time to sell in more highly-pried areas increasing faster than elsewhere. Days listed in the South West and South East increased by four days last month, while London properties stuck for five days longer.

It’s all to play for in September, when markets traditionally come back to life, but this year is shaping up to be another “year of two halves”. Q1 was heavily skewed to the busy end as deals rushed through to beat the new buy-to-let SDLT surcharge on 1st April; as a result, 12% more deals were done in the first half of the year compared to the first six months of 2015.

New buyer enquiries in July, by contrast, stood 18% down on the same period last year. It is, however, work remembering that comparing this Summer with last year is a bit apples and oranges,  given 2015’s post-election boost distorting the market. 2014 – a less abnormal benchmark – saw 4% fewer new buyer enquiries in July compared to last month…

Miles Shipside, Rightmove director and housing market analyst: “Many prospective buyers take a summer break from home-hunting, and those who come to market at this quieter time of year tend to price more aggressively. This summer is also affected by both Brexit uncertainty and the aftermath of the buy-to-let rush in March to beat the stamp duty deadline. Most sellers seem to recognise that buyers may want some extra encouragement to get them to put their towel on a property to reserve it as well as on their sunbed! The average fall in new seller asking prices at this time of year has been 1.2% over the last six years, so this month’s fall is exactly in line with the long-term average. The largest price falls at this time of year were -2.0% and -1.3% in 2014 and 2010, with the smallest fall being -0.8% in post-election boosted 2015.

“It will be welcome news for some northerners that the traditional north-south divide may be taking a rare turn in their favour. London has seen its price boom curtailed by punitive stamp duty and over-stretched affordability and has been in re-adjustment for a year or more, mostly affecting Inner London. At this time of year interest from buyers of more expensive properties that typify much of London and its commuter belt tends to tail off more, as they are often discretionary movers. Having waited for the referendum result, it now seems that some are also waiting until the summer holidays are over before reviewing their course of action.

“There is pent-up demand with potential buyers still enquiring in very large numbers though obviously more muted compared to 2015’s post-election highs. While the summer sales slowdown has come early in some locations with the run-up to the referendum subduing activity in May and June, there are still hundreds of thousands of buyer enquiries every week. Buyers can often get a better deal at this time of year if estate agents match them up with motivated sellers. By autumn we should get a clearer view of the strength of any post-referendum hangover, though that also depends on buyers’ confidence to turn this interest into action. The latest interest rate cut making already cheap-to-borrow money even cheaper should act as an added boost to confidence.
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