Stamp duty changes dampen interest in larger family homes in the area

Small is beautiful in Acton at the moment with flats leading the way in the local property market.

During the second quarter of this year the average price of flats and maisonettes in the W3 post code area reached an all-time high according to figures from the Land Registry. The level rose to £388,946 up by 15.9% compared with last year.

Over the longer term flats have still underperformed relative to other prices rising by 92.6% over the last decade whereas house prices have more than doubled.

Larger properties also saw price rises but the average terrace house remains below the all-time peak seen in the third quarter of last year. The overall average is now £542,029 which is up by 7.8% over the year with a lack of activity at the very top end of the market hampering the rate of increase. Local estate agents put this down to stamp duty threshold changes from April which have reduced turnover in large family homes in the area.

June data from the Land Registry showed that the average house price in London increased by 9.2% over the same period in 2014. This brings the average to £481,820. For England and Wales as a whole the average price rose by 5.4% to an new all-time high of £181,619. The previous record was in November 2007 before the financial crisis.

The number of completed house sales in England & Wales during April 2015 decreased by 19% to 57,180 compared with 70,244 in April 2014 and the number of properties sold in England and Wales for over £1 million decreased by 22%to 874 from 1,114 a year earlier. There were only 41 repossessions in London in April - half of the level seen a year ago.

The latest RICS UK Residential Market Survey shows that house prices continue to be squeezed higher by growing demand and contracting supply in London. While 40% more chartered surveyors saw prices rise in London in July, supply to the market continued to decline with 16% more respondents reporting a fall in new instructions. Additionally, the shortage of housing inventory worsened further in the capital during July, with the average number of properties for sale per surveyor in London slipping to the lowest figure since February 2014.

Near term expectations for prices also continue to reflect the imbalance between demand and supply with 48% of members expecting prices to continue to rise in London over the next three months. This is the highest level since March 2014. However, rising prices have not dampened interest as new buyer enquiries rose for the fourth month in succession, with 36% of respondents reporting a rise in demand in the capital. Despite this steady and sustained improvement in demand, newly agreed sales continued to decline in London. Going forward, there is more optimism regarding the prospects for activity with 37% more respondents expecting sales to gain momentum over the next three months.

Simon Rubinsohn, RICS Chief Economist, said, “A renewed acceleration in house price inflation allied to a fairly flat trend in sales activity highlights the very real challenges being presented by the housing market. More worrying still is the suspicion that the imbalance between supply and demand will lead to even strong price gains over the next twelve months. This is also visible in the firmer pattern in the buyer enquiries series which has now risen for four months in succession reflecting in part, a further modest easing in credit conditions. This trend could be brought to a halt when base rates do eventually begin to rise but the dovish tone to the latest Bank of England Inflation Report suggests the first move will come a little later than previously thought likely and that subsequent increases will be very gradual indeed.’’

In a forthcoming edition of the ActonW3.com newsletter there will be a complete listing of recent property sales in the area. To register to receive it click here.

August 19, 2015