The residential sales market in SE1 has been challenging this year, in terms of both falling transactions and slower price growth than last year. Sales across the first half of 2015 were around 6% lower than in the corresponding period in 2014. Nonetheless, owners are still enjoying average sales values in SE1 that are 70% above their pre-global-recession peak in 2008.
Although uncertainty in the lead-up to the General Election was widely blamed for this slowdown, the post-election “bounce” that everyone had anticipated failed to materialise, proving that other factors are at play. One of those factors is the change to the Stamp Duty system brought in by the Chancellor last year, which has made the purchase of most properties above £937,500 more expensive than they were previously. For example, a property selling for £1.5m would now attract an extra £18,750 in tax, while a £2m property would cost the buyer an extra £53,000.
Although buyers have been quick to price this extra cost into their asking price, sellers have not, and there is generally a substantial gap between the price sellers are asking for and the price buyers are prepared to pay. Many vendors have found that they have had to reduce their asking price to achieve a sale; a trend that has been seen across much of central London, where the number of price reductions rose by 71% in the first half of the year compared to 2014.
This has meant that, despite the record-low mortgage rates available to buyers, price growth has slowed this year, and average sold prices in the SE1 market for the first seven months of 2015 were 4.4% higher than the average for 2014, compared to double-digit growth in both of the previous two years.