New research by property search portal home.co.uk shows that property sales are taking longer than ever in London, with the average time on the market up by 15% from September 2017. Overall, properties are taking an average of 191 days to sell, up from 166, with flats and detached homes both taking over 200 days.
So, why has the capital’s previously buoyant property market stalled and what are the prospects for the future?
An abundance of properties
Longer sales times inevitably mean that there are also more properties on the market in London. Rightmove estimates a 16.4% increase in the number of houses and flats on sale in the last year. This makes it a buyers market, and with so much competition, it is so much harder to sell, especially if you want to sell your house fast.
The decrease in buyers has been fuelled by several factors, including a drop in EU and overseas buyers following the Brexit vote, as well as an increase in the number of people quitting the capital for commuter towns and cities where they get significantly more home for their money.
A lack of affordability
One of the biggest problem for home sellers in London is the sheer lack of affordability that has arisen from years of rampaging price rises. Online estate agents, Housesimple, claims that there are no homes left below £100,000 in London, and just four below the stamp duty threshold of £125,000.
The average London property now comes in at an eye-watering £485,000 according to the Office for National Statistics, with Rightmove putting the figure even higher at £609,205.
With mortgage companies still reluctant to over-lend in the wake of the financial crisis, these prices are simply out of reach of many people, especially first-time buyers with no previous home sale to fund a deposit.
An uncertain future
We have already seen an increase in interest rates this year, and a no-deal Brexit could see rates climbing even higher. This makes buyers nervous, leading to less people in the market for the increased number of homes available in the city.
Many analysts are going even further, predicting a full-blown house price crash in London, with the market seeing a serious adjustment to the recent price hikes. Worst case scenarios are predicting a precipitous drop in prices of as much as 40%, and this does not encourage anyone who is currently looking at buying in London to take that plunge.
Time to escape
According to Hamptons International, over 30,000 Londoners have already left the city in the first six months of 2018, taking their profits on price rises before any market adjustment kicks in – a rise of a sixth compared the same period in 2017. Many more are hoping to join them before the looming March 29th Brexit deadline, yet the sluggish market is tying their hands. Hardly surprising then, that prompt sale specialists are becoming increasingly popular for London home sellers.
“We are now closer to leaving the EU than the average London home seller is to completing their sale, which is a sobering thought,” says Kelvin Elliott from property purchase specialists, Yes! Homebuyers. “A prompt, professional home sale might not seem like good value on the surface, yet waiting to sell in an uncertain market, while prices plunge around you, could cost you considerably more.
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