Buyer interest switches to 'bog standard' properties from luxury homes

The price of a bog standard terrace house in Putney now averages over a million pounds according to the latest official figures.

There were 54 of the sold in the third quarter of 2014 at an average price of £1,005,803 the first time it has risen above the seven figure mark.

Buyer interest seems to have switched from the very top end of the market which had been very buoyant in the first half of the year. Only 22 detached and semi-detached properties sold in the area during the period, well down on the same three months last year. At the same time flat sales have been relatively strong and made up 72% of transactions during the quarter.

Local Agent Allan Fuller commented: "Mansion Tax is an issue that has not influenced property until recently, but all the talk of this new annual levy championed by some political parties has had a stultifying effect on the £2million and plus property market. Even for the very rich a 2% annual tax of at least £20,000 each year, will have top end buyers sitting on their hands."

He added, "Much stricter mortgage lending criteria, especially for self-employed is having an effect. People are becoming trapped in their existing home because they could no longer get a new mortgage, often they would not get again their existing mortgage, let alone a larger one even if they could easily afford it! Whilst caution in lending is to be commended these regulations are over the top. The net result is even less property coming on to the market because less people are able to move."

"The lower end of the market and most of the flat market has remained buoyant, with strong demand from first time buyers and investors. Concerns that new buyers cannot afford property have not proved to be the case, high earning first time buyers are attracted to Putney and often the good old bank of Mum and Dad are helping with the deposit. Investors see little point in leaving money in the bank earning virtually no interest, so a rental return, and the prospect of capital growth in the value make an irresistible combination."

"Concerns about interest rates have subsided as predictions have shifted from the final part of this year, and now the latest suggestions are that they could remain at current levels until the final quarter of next year. "

London property prices generally are up by 18.4% to £460,521 in the year to end September according to the Land Registry although they are slightly down from the level seen at the end of August. The a average house price in England and Wales is now £177,299 compared with the peak of £181,324 in November 2007. This is a rise of 7.2% compared with the same month last year.

The most up-to-date figures available show that during July 2014 the number of completed house sales in England & Wales increased by 7 per cent to 79,214 compared with 73,749 in July 2013. The number of properties sold in England and Wales for over £1 million in July 2014 increased by 19 per cent to 1,439 from 1,207 in July 2013.

The Royal Institution of Chartered Surveyors (RICS) are striking a cautious note pointing out that demand for property in London has been down for six months in a row. Prices are also falling in more recent months according to their survey which covers sales up to the end of October.

London is experiencing a fall in buyer demand with 62% more chartered surveyors reporting a fall over the last month. Significantly, a little more stock is now coming onto the market with 15% more chartered surveyors seeing a rise in new instructions up from 3% more last month. The RICS say that this points to the market in London moving towards a more sustainable position and they remain modestly positive on a twelve month view.

In London tenant demand was broadly flat over the last quarter. Despite this, rents are still expected to continue to move higher albeit by a little less than 2 per cent over the next twelve months.

Simon Rubinsohn, RICS Chief Economist, said, “The flatter trend in the market is partly a reflection of potential buyers becoming a little more cautious about making a purchase as more stringent lending criteria has made it harder to access mortgage finance. An increasing awareness of the approaching general election also appears to be contributing to the softer market if the responses to the latest survey are anything to go by. However, with new instructions still flat at a headline level as has been the case for most of the last year it seems implausible that the dip in demand will result in very much of a decline in house prices.”

Copyright notice: All figures in this article are based on data released by the Land Registry. The numbers are derived from analysis performed by PutneySW15.com. Any use of these numbers should jointly attribute the Land Registry and PutneySW15.com.

November 14, 2014