London Home Owners are not Rushing to Sell Quickly

When purchasing property, people often think about two things: location and return on investment. It is hard to imagine a location better than London for return on investment, but Rightmove Confirms that the London property market is struggling. Similarly Direct House Buyer has reported that the bubble has probably burst or at least reached its’s high point.

The property-listing website reports a 1% drop in asking prices in London from the year before, the sixth consecutive fall for the capital city. In January, property prices dipped almost 1.5% to their lowest amount since August 2015. However, property prices in the UK rose 4.4% from the month before, signaling the usual spring selling cycle upswing.

The Rest of the UK has Experienced Quicker Gains

The London housing market lagged behind the rest of the UK in 2017 and there is little evidence to suggest that there will be any upswing in store. UK property prices increased 0.8% in February from January, below the average for this time of year. Despite prices rising nationally, this year’s market predictions are pessimistic at about 0%-3% while you may see prices continue to climb nationally, London prices might continue to fall around 2% in 2018. The Royal Institution of Chartered Surveyors predicts prices to fall over the next 12 months in London while Nationwide recorded a 0.5% decline in prices. Speculation suggests that Zone 1 prices could fall by up to 5% but Zone 6 could rise by 3%.

Brexit uncertainty has halted demand and the years of relentless inflation has pushed buyers out of the city. While there is a cooling-off of prices, the average price of a house in London is more than £630,000, more than 20 times the average UK salary. The average deposit in London is more than £90,000, which means there is a very limited number of buyers who can purchase in that market.

For owners who want to sell in the down-turning London market, they will not only have to be more realistic with asking prices but also more patient. The average time to sell a property in the capital is up 10 days from 73 to 83 days in the last year.

London Home Owners are not Rushing to Sell Quickly

The slowed market has created weary sellers, which is slowing the cool down and limiting damage. There is a long tradition of high demand and low supply in the city and cautious sellers are not panicking to sell fast. Property prices generally re-adjust quickly after a boom if sellers panic and flood the market, but the London market and investors are resilient, and the would-be-sellers are showing patience to prevent prices from dropping further. This slowdown could result in volumes to fall by up to 10% this year, according to Jefferies Bank.

Although the volume slowdown is not exclusive to London. Nationally the numbers of interested buyers and properties coming to the market fell in January according to RICS. New buyer interest fell for the 10th consecutive month suggesting that the subdue market will continue.

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