New stock is drying up as vendors sit tight until the general election, says RICS
Estate agents expect house prices in London to drop by as much as 5pc this year with the cost of larger family homes falling the most, an industry survey has revealed.
The report from the Royal Institute of Chartered Surveyors (RICS) has shown that demand for new homes in the capital has continued to weaken, with 45pc more RICS members reporting a decline in new buyer enquiries in December compared with November.
There was optimism around the Chancellor’s radical stamp duty overhaul, which was announced in the Autumn Statement last month and will lighten the tax burden for buyers.
But, despite this, the survey respondents predicted a fall in sales in the capital of 5pc to 10pc and a fall in prices from 2pc to 5pc as overinflated values correct and as political uncertainty ahead of the general election continues to cool the top end of the market.
The report showed that the number of properties coming on to the market are hovering close to historic lows.
“There will be a very cautious start to 2015 in the central London property market,” said one estate agent from Jackson Stops & Staff in Chelsea. “Vendors appear reluctant to market their properties in the expectation of having to take significantly lower offers.”
The number of surveyors and estate agents that reported a fall in people looking to buy a new home increased by 10pc in the last month of the year.
It came as new buyer enquiries fell for the sixth consecutive month, with property professionals blaming stricter mortgage criteria in the form of the Mortgage Market Review, introduced last April, and the normal seasonal slowdown in the run up to Christmas.
The report showed property agents believe that stamp duty reform will give sales a much-needed boost this year, leading to a 2pc to 5pc uplift in transactions across the country.
While their outlook on London was pessimistic, agents in the North, the South West, Scotland and Northern Ireland saw a rebound in buyer demand as consumer confidence in the economy and increased employment spread from London and the South East into regions that had been relatively untouched by last year’s housing market recovery.
“The changes to stamp duty are expected to provide a timely boost to activity in the housing market across most of the country, but there remain significant challenges, particularly for first-time buyers seeking to take an initial step on to the property ladder,” said Simon Rubinsohn, chief economist at RICS.
“Meanwhile, demand to rent property is growing as the sales market slows and this, coupled with a drop in supply of new stock to let, is helping underpin the rental outlook for landlords pretty much across the whole of the country.”
This news comes as new data from the Council of Mortgage Lenders showed that lending for buy-to-let was the only segment of the mortgage market to grow while overall lending fell 12pc in December.
Source: The Telegraph