Prices in Camden have fallen for the fourth month in a row, transaction numbers have quartered since May and sellers are accepting sizeable discounts. But is it really time to call Armageddon on the north London property market?
The retired doctor, 61, had plans to move back to Liverpool where he was originally from and figured that he’d ideally be out of the capital by July.
But, come September he was still in Highgate, aiming for a new move date at the end of the year or even January 2017.
In a part of London where we’ve got used to the idea that any old wreck will have a solid offer from a cash investor for well over the asking price within seconds of being listed, this sluggish progress seemed surprising. Isn’t there always demand for good quality period homes in north London?
“I’ve had no trouble selling my house – I had a lot of interest from when I first put it on the market – but my potential buyers have had trouble,” he explains.
“They’re downsizing from a bigger, significantly more expensive house, also in Highgate, and it’s taken them a long time to sell. I’ve been sitting on their offer for my house since March, although I think it may finally have resolved.”
What’s causing the delay?
The obvious answer would appear to be the Brexit effect.
The average price of homes sold in Camden in July, the month after the referendum, fell 3.8 per cent compared to, June according to the latest figures from the Land Registry.
At £788,065 Camden house prices were also 0.6 per cent lower than those recorded for July 2015.
Closer to home, the Ham & High property supplement – that reliable barometer of the north London property market – may be thickening with adverts again after the typical August lull, but is less hefty than the bulky September editions of three or more years ago.
So while the result of the EU referendum has not increased confidence amongst domestic buyers or sellers, it’s only a chapter of a somewhat longer story.
Roarie Scarisbrick, partner at Property Vision says: “The perception amongst buyers is that there’s been a change that’s in part due to the uncertainty around the referendum and what’s going to happen next but also it’s been a tough few years for buyers of property because costs have escalated dramatically.”
The changes to Stamp Duty introduced by George Osborne in December 2014, which the then-Chancellor said would decrease the transaction tax paid by 98 per cent of buyers, increased the tax burden on buyers of properties costing more than around £1million slightly and on buyers of more expensive properties significantly.
This has inevitably had a dampening effect on the market in higher priced parts of the country, Hampstead and Highgate among their number, as buying a home becomes ever more expensive, quite aside from soaring asking prices.
“It’s been a tough few years for buyers of property because costs have escalated dramatically, especially when you start to march into the higher budget range, you’re looking at some pretty eye watering sums” says Scarisbrick. “The volume of buyers is way down and continues to dwindle. It’s a bit of a buyers’ market.”
How low should you offer?
If this sounds like a warning of an impending crash, however, don’t get your buying hopes up, nor should you despair if you’re thinking of selling. We’re talking softened not slashed prices here.
“Across the board everybody’s talking about a 10 per cent reduction, but it doesn’t necessarily apply to every street and to every house,” says Scarisbrick.
“It’s not a bargain basement out there, you’ve still got to pay a sensible price, although values are holding up better at the lower end than at the higher end: £2-5million is where it starts to get sticky. I don’t think we’re in an Armageddon situation, but it’s the part of the market that’s been most affected.”
“Some of the prices we’re seeing in certain streets in Highgate are ridiculous,” says Charlotte Bourne, associate director of Taylor Gibbs. “Some of them are about £50,000 over what they should be on for. In those cases, 10 or 20 per cent below the asking price would be a good offer.”
In less expensive fringe areas business may not be booming but nor is the market standing still.
Yonni Tahor of Benham & Reeves in West Hampstead says: “One of my colleagues alone did 110 viewings in August and we’ve taken on three houses between £1.85million and £2million in the first week of September.
“It does remain a price sensitive market and there’s no point putting your property on with a bullish asking price because viewers won’t be attracted but, as an agent, if you’re willing to put in some hard work you’ll get rewards.”
Why are we not talking about a full scale property price crash?
For one thing, there just aren’t enough people who are under pressure to sell, meaning that the supply of available homes is limited.
“I’ve told my estate agent that if someone puts in an offer, they’re not in a chain, they can buy it fairly quickly, and they’re prepared to meet the price show them round and if they’re not, don’t. I’m not under any particular pressure to move,” says Coakley.
“I did have someone put an offer in and the day after Brexit they phoned up and said ‘we’re going to drop the offer by something like 10 per cent’. I told them to get stuffed. If I was desperate to sell I’d have had to say yes but I wasn’t and anyway, I had this other offer from the guy who just had to sell his place first.”
Coakley’s story is not unusual. North London is full of family homeowners who would perhaps like to sell up and downsize but are in no real rush to do so if it’s not convenient and, crucially, they can afford not to.
“Stock remains fairly limited as it was after the financial crash as well,” says Camilla Dell, managing partner of Black Brick buying agency. “What happens in these markets is that a lot of sellers that don’t need to sell don’t sell. Instead they put their properties onto the rental market.
“With interest rates so low, many landlords and other owners who might have been in a position where they had to sell aren’t.”
Where are the investors?
The Brexit-weakened pound may have made all our summer holidays more expensive but you might also expect it to mean that foreign investors would be snapping up London property while it’s comparatively cheap.
Yet transaction numbers in Camden for May 2016 (the most recent figures available) were the lowest they’ve been since February 2009 with only 94 properties sold – a sign of pre-referendum jitters?
Admittedly this slump did follow a particularly busy March when investors rushed through transactions before the additional three per cent Stamp Duty for second homes was introduced in April but even so, it suggests it’s not just Brits who aren’t buying.
“Overseas buyers have seen Brexit as an opportunity although we’re yet to see many of them actually buying. There’s a lot of interest but I still think there’s some nervousness.”
Scarisbrick agrees. “The new Stamp Duty for second homes killed the market for discretionary investors. It’s very hard to get a return on their investment now.
“This year we’re starting to see investor buyers, largely dollar denominated, following the referendum.
“They smelt blood, their view was that we’re on our knees. They’re looking around, time will tell if they find the kind of discounts they’re looking for.”
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