The amount of houses that have swapped hands in London has dropped by a fifth over a four year period, all while home buying in the North of England and the Midlands have picked up, which clearly suggests that homes aren’t affordable in the capital as well as the changing patterns of regional housing demand.
Research that analysed the level of transactions between 2014 and 2017 found out that the number of property sales across the capital dropped by 20% over that time frame, while transactions shot up 13% in the Northwest, and 9% in both Yorkshire & the Humber and the West Midlands.
In addition, other regional markets that experienced significant price growth in recent years – in particular the East of England as well as the Southeast – also saw a drop in activity, with a 6% and 8% drop respectively.
Speaking about the data, Neal Hudson – who is a director at Residential Analysts, who are the market research firm who produced the figures by using Land Registry and HM Revenue & Customs data – said that London is essentially unaffordable unless you’re part of the elite.
“We’ve hit a point where London is unaffordable for all but the most equity-rich of buyers. That is combined with some of the tax changes that have affected the central London market. Affordability is less stretched in places like the north-west.”
As a result of the high price of property in both the Southeast and London, this means that buyers in said regions will be caught out by stamp duty changes, which impose significantly higher levies on the most expensive homes.
As well as this, rates are even higher for those looking to purchase a second home or a buy-to-let property, while landlord investors are now facing brand new constraints on growth from regulatory and tax changes.
Mr Hudson added that while prices have dropped in some areas of London, there’s been “no trigger” for a deeper collapse in prices, which is partly due to the fact mortgage rates are staying low, by historic standards.
“I’d be surprised to see the overall London region see significant price falls,” he said. “It’s a very diverse market. There will be some areas that are still rising and some falling.”
However, Hudson added the risk of falling prices is high in localised markets, and particularly in new luxury housing developments.
“There’s an awful lot of stock coming through there that could make it quite interesting,” he added.