We all know that London’s property market is under pressure. Some businesses are struggling, some investors are becoming wary and there is an increasing concern regarding the outcome of Brexit.
A recent report from Rightmove shows that sellers in London are experiencing a wake-up call. While estate agents may have been concerned for a while about London’s property prices, sellers have continued to price theirs high and have been facing the inevitable consequences.
It’s A Buyer’s Market
At the moment, it really is a buyer’s market. This is not great news for sellers looking to take advantage of the London property premium. During the first quarter of 2018, the average cost of a property in London fell to £628,000. That’s a drop of 4.4%.
All by itself, this is alarming enough. But on top of this, property sellers are finding themselves under more pressure than they’ve experienced for ten years. The average difference between the asking price, the listed price and the sale price of a property has increased to £27,000. Average sellers are having to accept almost £30,000 less than their original ‘final’ price and this is the clearest indication yet of how weak the property market is.
Adjust Expectations
The number of properties for sale in London is increasing, and buyers can take the chance of offering a low price secure in the knowledge that there are plenty of other options nearby. As London’s market continues to soften, this will put more pressure on sellers.
Everyone has seen by now that Brexit negotiations seem to be tense and are still set to last for some time yet. While the major implications are yet to be explained, the property market in London is losing buyers. Investors are instead turning to other areas in the UK, such as the Northwest, where there are properties at lower prices, with higher ROI.
However, London property has always gone through peaks and troughs and although it seems clear that there will be a setback in the short to medium term, it’s very likely to recover and bounce back soon enough. The message to investors has to be: don’t write London off.
What’s Next?
We know Brexit negotiations are having an impact on the UK property market, the economy as a whole and London’s property market in particular. However, we haven’t yet seen any of the most dire predictions come to fruition as yet. This is definitely a positive, but it’s also true that the market is under definite pressure.
Prices are softening, and buyers are enjoying a time of being able to be pickier. Sellers appear to be ignoring advice on the whole and pricing their properties at unobtainable asking prices. Despite these factors, there is no real sign of the collapse of London’s property market predicted by so many ‘experts’ following the EU Referendum. Almost two years after the decision, the market is still holding firm for the most part.
Decade Of Increasing Prices
So, the London property market may be struggling right now but it’s worth looking back over the last ten years at the strong bounce back from the 2007/2008 crisis. IN 2018, there has been no sign of a true crash and little sign of investors departing the UK in droves.
The exchange rate has seen a slight improvement and, although Brexit certainly will dictate the economy in the medium term, it looks as though the London property market will weather the storm just fine.