CNBC reported yesterday that “London Luxury Property Prices Fall 20%”. I can’t repeat my initial reaction as this is a family-friendly publication. Suffice to say that the news took me by surprise and I waited for the phone to explode with calls from concerned clients.
Of course, on further investigation I discovered that I hadn’t missed one of the biggest market moves in recent times. The reporter at CNBC had got slightly overexcited with their headline (which has since been corrected).
The report centred on recent figures published by Strutt and Parker which showed that “the overall value of properties transacted was down 21.1 percent in the third quarter of 2014, compared with the same period in 2013.
In the same timeframe, the value of properties under £2 million ($3.23 million) saw a decrease of 20.8 percent and properties in the £2 to £5 million price bracket saw prices fall 27.1 percent. Homes worth over £5 million performed slightly better but still saw a decline of 15.2 percent.”
Please note that this is the total value of the properties transacted rather than a 20% fall in the price of the properties. Now, 2013 was a record breaking year so any comparison was likely to be less flattering. However, it does show how the market has changed in recent months with buyers becoming far more selective (at last).
There has definitely been a fall in prices but this does not tell the whole story. High quality properties are still in demand and achieving similar prices to 3-5 months ago – Marsh & Parsons thinks prices were “up” 0.5% in the third quarter in prime central London as a whole although “down” 0.4% in Chelsea. Of course, this degree of accuracy should always be treated with a certain degree of suspicion!!
What this does show is that the uncertainty caused by the election and the political posturing over housing is causing concern – especially Miliband and Balls’ Mansion Tax Bonanza. This is good news in my mind: this fall in transactions and the related fall in Stamp Duty receipts will hopefully highlight the fact that a Mansion Tax will actually lead to lower revenues from housing.
In fact as one of my clients, a well-known political commentator, said to me about the Mansion Tax: “It’s a vote winner or vote hardener for both true Tories and true labour. But I don’t get the impression anyone thinks it would actually go ahead!”
If and it’s a very big “if”, Labour win the election without the need for a coalition with the Lib Dems then they can point to the fact that transactions have fallen and that a rerating of the Council Tax bands is a better option (if they have to form a coalition, the Lib Dems recent change of heart about Mansion Tax will also give them a plausible reason for changing policy).
It’s all about saving face, don’t you know…
Of course, it would have been much better if a Mansion Tax had never been mentioned. But then asking a politician to consider the potential unintended consequences of their actions is like asking my children not to attack me with swords and light sabres at 6am in the morning. Kids, if only my parents had warned me what a pain they are. Oh….
In the next email, I will show you negotiation tactics you can use to take advantage of this change in sentiment in the market.
In the meantime, if you would like to discuss this or any other questions you have on the prime London property market, you can request a complimentary property search health check. Simply email Rachael@mercuryhomesearch.com to request a date in October.
The Property Search Health Check is a twenty minute diagnostic telephone consultation during which I analyse your property search to answer questions, highlight specific problems and show you how to avoid them, so that you can buy the finest property on the best terms possible.
I will answer all your questions and provide a blueprint tailored specifically to your property search, which will give you a distinct advantage over other buyers. The Health Check is free, but is also guaranteed to save you money, time and stress whether you have just started thinking about buying a property or have already started your search.
Of course few things in life are really free and this is no exception.
Let me just say this: it is possible that after I have answered your questions you will be impressed by my expertise and think it appropriate to ask me to help you acquire your home or investment property in London.
But please be assured, the Property Search Health Check is not a sales pitch in disguise. It is an in depth review of your property requirements and concerns, which is underpinned by my 13 years’ experience of buying property in London and negotiating hundreds of millions of pounds worth of property transactions.
You are obviously a successful and intelligent person otherwise you would not have accumulated the wealth to allow you to buy a property in London. However, you are probably not an expert on this particular subject.
I have seen very shrewd individuals buy genuinely poor properties and/or massively overpay because they did not really understand the prime London property market. I have been very successful and can show you the dangers to avoid and the opportunities to target. So why wouldn’t you let me share this information with you?
To make your reservation, please contact my assistant, Rachael, now at Rachael@mercuryhomesearch.com or call 0800 389 4280 (or +44 800 389 4280 from outside the UK).