At the beginning of the year we looked at where the London property market stood at the start of 2016. The average London house price had topped £500,000, the bank rate was still set at 0.5% and gross mortgage lending was 23% higher than the previous year.
As we say goodbye to Quarter 1, experienced negotiator and former surveyor Tim Gray (who you can often find quoted as an industry expert in the national press) gives us an update on the London property market.
Stamp duty changes for buy to let landlords
Back in November George Osborne announced that buy to let properties and second homes would incur an additional 3% stamp duty land tax (SDLT) from April 2016. After the announcement we prepared for an extremely busy quarter – and we weren’t disappointed. Demand was incredibly strong and we sold more properties this quarter than any other agency in NW6*.
However what surprised us the most is that although investors knew of the tax deadline from last November, 61% of our sales this quarter happened in March, showing a last minute rush from buyers clearly keen to avoid paying the extra tax. Over 50% of our sales this quarter were to buy to let investors, a two fold increase from this time last year.
*Rightmove and Zoopla stats
We now know that the referendum on Britain’s membership of the EU will take place on 23rd June. So what impact has this announcement had on the London property market so far?
It is still early days and because the last European referendum was over 40 years ago there is little information available from previous years to rely on. New buyer registrations are lower than this time last year, so we believe that the uncertainty could be causing a section of the market to defer their decision to buy or sell until after June. We often see similar market conditions around the time of general elections, however, whatever the outcome of the referendum life still goes on - buyers still want to leave their rented flats and buy their first home, families still expand and need more space and families still downsize. So although buyer numbers may be lower than traditionally expected in Q1 and Q2, we still expect a healthy amount of transactions to take place.
London house prices
Our average sale price this quarter has been £633,000 – considerably higher than the average price in the capital which is £530,368 according to the latest Land Registry data. The property sold for the lowest price was a small one bedroom flat in Kilburn bought as a rental investment for £350,000, whilst the property sold for the highest price was a three bedroom mansion flat in West Hampstead that was bought by a homeowner for £1,440,000.
The average price of £633,000 highlights that there was a large amount of one bedroom and small two bedroom properties sold. This was no doubt in part due to the increase in buy to let investors as detailed above, however first time buyers are also driving the market forward. With the highest transaction at £1.4m it’s clear that West Hampstead and market conditions are still attractive to buyers – particularly those moving in from Central London which is a trend we have seen increase this quarter.
New homes in West Hampstead
West Hampstead’s skyline is changing with a huge amount of development currently taking place. Buildings such as West Hampstead Square, The Central and The Residence are due to complete in the next six months and further developments are planned (including the redevelopment of the London Overground Station and the former Camden council offices / Travis Perkins site on West End Lane).
Whether you are a fan or not, these substantial works by large developers have shined a spotlight on West Hampstead and we have undoubtedly seen a large increase in buyers from outside of the area wanting to live in or purchase investment properties in NW6/NW2. Over 60% of our buyers have come from outside of the immediate area this first quarter, with a large proportion of these (60%) from Marylebone, St John’s Wood and Hampstead. This shows there is high demand for West Hampstead from traditionally more expensive areas which in turn suggests future price growth.
What’s next for the London property market
It’s always a challenge to make predictions for a new quarter. In fact, with all the changes we have seen in the last three months we’ve only managed to touch on a few here, so it’s difficult to know exactly what the next quarter will bring. What we do know is that as the Spring market hits garden flats and family houses will be extremely popular with buyers and although price rises will not be on as high a curve as this time last year, we still expect to see strong prices and multiple bids made for sensibly priced properties in Quarter 2.