October 25, 2016
London property sales and prices recover after traditional summer lull
The London Property Sales market is now fully immersed in autumn, with the clocks going back in just a couple of weeks.
This also means that it’s been around four months since the EU referendum. The good news is that the latest market data shows that confidence is returning to the market and prices rises and transactions uplifts have started to follow.
Here’s a round-up of what you need to know about the London property market during October…
Number of sales recovers as London prices continue upwards
The average price of a property coming to the market in the UK has increased by 0.9% (£2,623) this month to £309,122, according to Rightmove. This is only 0.4% below the all-time national high reached in June, just before Britain voted to leave the EU.
What’s more, the average national number of sales agreed in September recovered from the traditional summer lull (and post-Brexit uncertainty) to stand just 4% down on the same period in 2015. Sales agreed are also up by 6% on 2014.
The price of property coming to the market has now risen for two months after two consecutive falls in July and August. In Greater London, property prices saw a monthly increase of 2.4% (+£14,859), driven by sellers of more expensive homes putting their properties on the market.
Tower Hamlets was one of the best performing boroughs this month – recording an average asking price increase of 8.1% since September. On an annual basis, prices in the area are now up by over 5%. The average asking price of a property in Hackney is now just shy of £650,000, according to Rightmove. The area recorded monthly price growth of -1.9%, with annual growth now sitting at -0.3%.
Monthly asking price growth in Lambeth was -3.0% between September and October – the typical cost of a property coming to market in this area is now £646,074. In Wandsworth, meanwhile, the average asking price dipped by 2% between September and October and is now 0.9% lower than this time last year.
Homeowners’ confidence improves as buyers return to the market
Post-Brexit fears are continuing to calm, with homebuyers now confident to return to the market. These are the findings from RICS’ latest UK Residential Market Survey.
While the uptick in buyer enquiries was only small, it highlights the strength of the housing market, even in times of political and economic uncertainty. The rise in new buyer enquiries for September was the first increase in seven months, suggesting that buyers are no longer hesitant or afraid to put their plans into action.
Further data from RICS found that the number of members reporting house prices growing over the last quarter increased from +13% in August to +17% in September. This is the first increase witnessed by RICS members since the end of last winter.
Landlord tax campaign to continue, despite recent high court rejection
The campaigners challenging to reverse the buy-to-let tax introduced by George Osborne have vowed to fight on, despite the recent rejection of their plans to launch a judicial review. The campaigners, led by Cherie Blair QC, had their application to launch a review into the new law turned down by a judge at the Royal Courts of Justice.
The new legislation, set to be phased in from April 2017, will mean higher and additional-rate taxpaying landlords losing the ability to deduct mortgage interest from their rental income before calculating their tax bill.
Since then it has been challenged by two landlords, Steve Bolton and Chris Cooper, whose case has been taken on by Cherie Blair (herself, along with her family, the owner of an extensive number of properties).
Blair, Cooper and Bolton have all insisted the campaign will continue, with efforts to persuade the government of the damaging effects of the tax ongoing and possible appeals being lodged. The campaigners will continue to raise awareness among landlords regarding the upcoming tax changes and contact local councils for possible support.
As things stand, the changes to mortgage interest tax relief are still set to come into play next year, but with such passionate and strong opposition to the changes, there could be a few more twists and turns to come.
Opposition is likely to become fiercer in the months leading up to the implementation of the buy-to-let tax. This is especially the case when you consider the recent news that 22% of landlords (equivalent to approximately 440,000) will be pushed into the higher rate tax bracket from 2017.
On top of this, the report, released by the National Landlords Association, stated that all landlords could be at risk from the phasing out of mortgage interest tax relief.