There are strong signs that the prime London market has reached its peak in the current cycle.Nick Barnes, Head of Research
There are strong signs that the prime London market has reached its peak in the current cycle. The more subdued environment which characterised the Prime London residential property market in the second quarter continued throughout Q3 and now appears likely to persist for some time, possibly up until the General Election. The caution among buyers became more entrenched and was reflected in applicant numbers which were nearly 18% down on the previous quarter while exchanges were 2.5% lower. The frustrations surrounding the length of time taken to conclude a sale due to more protracted lender and solicitor requirements also gave less committed purchasers the opportunity to withdraw from deals. Consequently, the number of fallthroughs also rose – by 9.7% – over the quarter.
Sentiment among vendors was more divided. Those who were keen to sell / needed to sell were generally more realistic in their asking price expectations. However, some vendors appeared happy to market their properties at prices unlikely to attract a purchaser or take their properties off the market altogether and wait for conditions to improve. The net effect was that available stock was 15% higher at the end of Q3 than at the end of the previous quarter and over one third higher than at the end of Q3 last year.
The hesitancy among buyers is the result of a combination of issues, none of which has a swift resolution in sight. Next year's General Election is increasingly occupying people's thoughts and the recent round of political party conferences has highlighted the differences between the parties with regard to the taxation of residential property: a proposed Mansion Tax from the Labour Party and additional Council Tax bands at the top end of the market from the Liberal Democrats proving the most controversial.