For a number of years, people around the United Kingdom have looked at the property market in central London and have felt highly envious of what was unfolding. The sums of money involved in the property market in this part of the country dwarfed the figures for the rest of the country, and the profits that were on offer were enough to make you feel rather jealous. Of course, if you were the person shelling out that money, your eyes may have watered at the price you were paying, but at least you knew you were buying in an area that was in high demand.
This may not be the case now and there are a number of estate agents who believe that the high value property markets and areas in the heart of London are experiencing some time in the doldrums. While there will always be various reasons explaining what is happening in the property market, a large factor in the current situation relates to the volume of properties that were placed on the market after the Conservative party victory in the May General Election. According to Rightmove, in the month leading up to the 15th of June, there was an 86% increase in the availability of homes on offer that were priced at £2m or more.
Supply is outstripping demand at the moment
When supply outstrips demand, price will fall to balance out the market and this has already been seen in the more exclusive parts of London. A large proportion of property owners have already tried to generate interest and a sale by slashing the asking price for their property. According to Zoopla, 20% of homes that they were listing at £1m or more have been lowered in price. On average, the asking price for these properties has fallen by over £185,000.
Lulu Egerton, who is a partner at Strutt & Parker, is quoted in the latest issue of the Rightmove market summary, talking about the outcome of the election result. The result was said to have “discombobulated the market and I think a lot of people are still taking stock in the aftermath.”
Another theory has been put forward by Tom Hudson, who is a partner at the Middleton Advisors buying agency and he said; “There’s nervousness about what might be in the government’s extra Budget on July 8 and people are thinking twice because of stamp duty.”
The change in stamp duty, which took place in December, has had a big impact on properties priced at £2m. Before the change in duty occurred, the duty on a property of £2m would have been £100,000 but now the duty on the same home at the same price would be £153,750, which is a considerable jump when you are looking at properties. A similar jump can be considered for properties that cost £5m. Previously, the stamp duty would have been £350,000, which was a high enough figure for most people, but nowadays, the stamp duty comes in at £513,750.