It is no secret that the London property market is under pressure. As it stands, businesses are struggling and there is growing confusion and concern regarding Brexit talks. In a recent report by Rightmove, it suggests that those looking to sell London property are experiencing a sharp wake-up call. Despite the fact that estate agents have been growing concerned about the price of London property for some time, sellers seem determined to overprice their properties and face the consequences. With problems plaguing the capital, it looks like buyers and sellers alike are in for a reality check.
A buyer’s market
For those looking to sell their London properties, and take advantage of the “London property premium”, this is now a buyer’s market.
In the first three months of 2018, the average cost of a London property fell by 4.4% to £628,000. The bigger concern however, is the fact that property sellers are coming under serious pressure. The average difference between the listed price, final asking price and the actual sale price has grown to £27,000. The fact that on average sellers are looking to take £27,000 below their ‘final’ asking price shows just how weak the market is becoming.
Lowering expectations
As the number of London properties for sale continues to grow, buyers can now offer a rock bottom price without the fear they could lose out as similar properties are available in that price bracket. As the market continues to soften, the negotiating time wasted between an unobtainable listed sale price and a rock-bottom price which sellers would take is placing yet more pressure on the downside. As Brexit negotiations are tense, they will last for some time and the major implications will take some time to emerge, but this is starving the London property market of buyers.
Uncertain future
There is no doubt that Brexit negotiations are having an impact on not only the UK economy but also the UK property market, with London certainly bearing the brunt of this problem. The doom and gloom scenarios are yet to emerge with any great momentum but, it is fair to say the markets are still under pressure. With prices softening, buyers are becoming more selective and sellers would appear to be ignoring the advice of their real estate agents to hold on to property.
An end to the boom period
While the London property market is struggling, it is by no means the struggle the market faced in 2007. It does look as though 2018 will be a very tough year for the London property market but this is just retracing part of the rally in property values of recent times. There is no sign of a crash, no sign of investors cutting the UK drift, there has been a slight improvement in the exchange rate and while Brexit will dictate the short-term direction of the UK economy and property market, it does look as though we are going to avoid the “falling off a cliff” scenario many were concerned about.
While the future is uncertain, it is by no means the worst-case scenario some predicted. It is certain, however, that many London property buyers and seller will need to readjust.
About Samir Salya
Samir Salya is the Chairman of Reign Holdings and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing.