The Daily Telegraph - Your Money
Peter Cowell’s return during the game versus the FTSE 350 index, which only went up by 5pc
From surveying the many house price indices, it may seem that there is a property market boom across the country. But the effects of the pandemic have hit London’s market hard, in particular demand for flats.
A new desire for more space after lockdown, combined with panicking landlords selling up and travel restrictions shutting out international buyers, has created a toxic cocktail for those trying to find a buyer for their flat. As a result, they have had to slash their prices as demand has crumbled and their properties languished on the market amid soaring supply.
In January, asking prices for inner and outer London flats were down 16.2pc and 6.7pc respectively compared with May 2020, according to data company TwentyCi. But prices for houses in London’s outer reaches were up 4pc.
The proportion of flats sold has fallen too, as consumer demand quickly changed, favouring a house with a garden in the outskirts over a small flat in a handy location. In the last three months of 2020, flats accounted for 60pc of all sales in central London, according to Hamptons International estate agents. This was a fall of nine percentage points from the same period in 2019.
Demand for flats has dropped just as more central London homes are coming up for sale, helping to push prices down further. In January, the number of agreed property sales in the most expensive areas of the capital fell 5pc year- on- year, according to LonRes, a data company. Yet there were 51pc more of these homes on the market at the start of the month.
Cory Askew, of Chestertons estate agents, said landlords have rushed to sell as the pandemic dried up their sources of international and student tenants. “People are offering 10pc below asking price, and agreeing 5pc under,” he said.
In Knightsbridge, where the market is largely dependent on Middle Eastern buyers who have been unable to travel, demand in January and February was down 30pc compared with the first two months of 2020, said Mr Askew. In Mayfair, the drop was 50pc. The introduction of a 2pc stamp duty surcharge on overseas buyers in April will be a further blow.
Despite the headwinds facing the London flat market, pent-up demand from the shutdown last year, and the added incentive of the stamp duty holiday, have still boosted sales.
But this gain is on shaky footing, largely dependent on the tax break. TwentyCi found that in December, agreed sales for inner London flats were up 40pc. But in January, when buyers thought they had little chance of completing in time for the tax break, agreed sales were up only 8pc year-on-year.
This underlines the importance of the tax cut to this part of the market. Chancellor Rishi Sunak is expected to announce a three-month extension to the stamp duty holiday in the Budget next week.
Once it ends for good, any growth in sales will recede quickly.
House sales in central London have been similarly dependent on the tax break, but the data suggest that unlike in the market for flats, there is much larger underlying demand.