Property in London: slight asking price rise due to lack of supply as Brexit deadline holds nervous sellers back
Asking prices of homes in London have risen £14,577 this month as sellers hold off from putting their homes on the market.
The average price tag rose slightly by 2.4 per cent in October to £618,432, according to the latest Rightmove asking price index.
This meek recovery is being driven by a lack of supply as vendors continue to wait for some political certainty and job security before trying to sell their homes.
In fact, there are 30 per cent fewer new sellers than this time last year as the Halloween Brexit deadline looms.
This drop in supply, combined with an uptick in sales of 0.8 per cent year-on-year, explains this monthly price increase.
Rightmove director Miles Shipside describes this volatile market as a “strange Brexit paradox”, where asking price patterns fluctuate every month with no sustained price pick-up.
“London has spent a few months in the price doldrums but the scarcity of properties coming to market is now helping to underpin prices, and the number of sales agreed is higher than the same month a year ago.
“There has been a long period of price readjustment, and as each month passes the chances get better that the market will return to positive territory. This month’s figures coincide with what is normally a busier autumn period,” explains Shipside.
The average time it takes to sell a home also climbed from 67 days in June — when the sales process was at its fastest so far this year — to 69 days in October.
This is 20 days quicker than in January but significantly longer than in early 2014, when London homes were taking under 50 days to sell.
Central London picks up
The overall asking price rise in October can also be attributed to increased activity in the high-end central London property market. The average price tag in all Travel Zones, apart from Zone 1, fell over the last 12 months.
The average asking price in Zone 1 has risen 0.6 per cent over the last 12 months to £1,356,878 and is up 6.4 per cent from September to October.
The biggest zonal drop was in Zone 6, where asking prices fell 2.5 per cent since October last year to £468,586.
Simon Deen, of high-end estate agents Aston Chase, says despite the British focus on Brexit, international buyers still see central London as a safe haven if they are buying for the long term.
“If they are buying a family home for the next 10 years there is stability in Zone 1. Climate protests in London compared to Hong Kong are vanilla and we’re seeing lots of activity from overseas buyers.”
The opening of several luxury hotels in London is a positive indicator of activity in the top end of the housing market, explains Becky Fatemi of Rokstone Properties.
“The two sectors are interdependent with luxury buyers needing to put up business contacts and extended family in nearby hotels.”
She sites the Rosewood on Grosvenor Square in Mayfair and the Peninsula overlooking Hyde Park.
However, Anthony Breach, analyst from the Centre for Cities, issues a warning: “These figures highlight the stark difference between London’s ultra-prime market in the centre and the rest of the city.
“The relative endurance of house prices in Zone 1 is unlikely to signal the beginning of a new real estate cycle. Instead I suspect they are a result of the pound’s depreciation in recent years, which has made prime property more affordable to overseas buyers,” he says.
UK sellers are in with a shot
Potential sellers are holding back across the UK, not just in the capital, as the Brexit deadline approaches.
Rightmove has recorded a smaller than usual autumn bounce, with the price of property coming to market seeing its lowest monthly rise at this time of year since the credit crunch of 2008, taking the average asking price in the UK to £306,712.
Price tags rose by just 0.6 per cent (£1,924) from September to October this year compared to a 10-year average of 1.6 per cent.
The number of sellers coming to market was down 13.5 per cent compared to October 2018, deterred by both political uncertainty and a fear that they will not get a good price for their home.
“Thousands of potential sellers are holding back compared to this time a year ago, though the number of buyers agreeing deals is virtually unchanged. Ironically, this means those who do put their home on the market have a better chance of selling it,” says Rightmove’s Miles Shipside.