|Second Worst Ever Quarter for Chiswick Property Sales|
Agents blame government and competitors as market sees turnover fall again
Chiswick’s residential property market has just seen one of its least active three months since records began. Only at the height of the financial crisis in 2009 did transaction levels fall below those seen in the last quarter of 2017. To date only 76 sales have been reported to the Land Registry in the three months in the W4 post code area. In better times over three hundred properties would change hands in Chiswick.
Although it appears to be a London wide problem the decline has been particularly steep in Chiswick and one local agent believes the industry only has itself to blame. Christian Harper of Harper Finn Estate Agents said, “Over the past eighteen months the country has been sailing towards our greatest ever economic perfect storm. These figures confirm that such uncertainty has a direct link to the residential property market, ‘even in Chiswick’, as some Chiswickians would say!
“In truth I think that a great number of Chiswick’s estate agents are partially to blame for such poor activity. They are still over-valuing to win instructions as they are simply too frightened to give realistic prices and lose business to another estate agents who are still promising miracles whilst writing thousands of letters stating that they have disappointed buyers! After a few weeks of marketing and little to no viewings, the agents are then asking for price reductions. It’s no surprise that the clients are then refusing to reduce the price as they are so convinced that their house is worth more because three agents told them so.”
Christian says that he receives on average about five calls a week from people who are currently on the market with another agent and are looking to change because they haven’t had any viewings. But when he suggests a lower price to enable a sale he meets with resistance and therefore thinks that other agents need to be straight with their clients about the current market situation.
It is the case that the headline number seems to indicate that prices have yet to see any significant falls. Last year the average price in W4 ended the year at £1,020,119 up by 1.7% at a time when the rest of London was seeing a decline. However, the overall average can no longer really be taken as a reliable guide to the true state of the market given the historically low level of turnover and it may be masking areas of weakness. For instance flat prices were down by 7.9% over the year and the average terraced house reduced in price by 2.7% A surprising robustness at the top end of the market is supporting the average price with over 10% of transactions being for detached houses which represent less than 1% of Chiswick residential property stock. Eight houses sold for over £2million during the period including Woodroofe House on Chiswick Mall which changed hands for £5,820,112, the sixth highest price ever paid for a home in W4. The Grade I listed red-brick house, which dates back to the end of the 17th century, has views of the Thames and landscaped gardens front and back along with 4/5 bedrooms. The Land Registry classified the sale as a terraced property which means the fall in average price stated earlier is probably understating the true picture.
Andrew Nunn of Andrew Nunn and Associates believes government intervention is the primary cause of the problem. He said, “the Land Registry figures for the last quarter of 2017 are further evidence of the damage caused by the government when they intervened in an already cooling property market back in 2014-5. Punitive changes via stamp duty and current tax changes for landlords have removed from the market both buy to let investors and overseas buyers thus leaving a domestic buyer base who found prices too high. The last quarter of 2017 reflects the stagnation in the market as sellers were reluctant to lower prices and local buyers shied away from all but a few properties. Prices remain too high as we enter 2018 but there are signs of realism from more sellers as they are persuaded to drop asking prices which should lead to an increase in turnover for the first quarter of 2018. The good news is that it should be financially beneficial to those who are intending to scale up market as price differentials between property types start to reduce.”
Christian Harper also sees some improvement and believes that the recent statement by the Bank of England that interest rates will need to rise sooner and quicker than previously expected is not the disaster for house prices that some have predicted. He said, “On the bright side, with the announcement this week that interest rates will need to increase, I have already noticed a slight improvement in the numbers of buyers enquiries. The desire for buyers to grab a fixed rate mortgage deal before they increase combined with realistic estate agent valuations could be just what we need in Q2 to give the whole market a push start. “
According to the Nationwide House Price Index, property values in London as a whole fell for the first time in eight years during 2017 down by half a percent. This made it the weakest performing region of the country for the first time since 2004.
Across the UK the price of the average home rose by 2.6% to £211,156 with low mortgage rates and healthy employment growth supporting price. However, prices were held back by mounting pressure on household incomes and declining consumer confidence. Demand from buy to let investors was also held back by stamp duty and tax changes during the year.
The RICS, the professional body for surveyors, is predicting a further though slight reduction in sales this year and further price declines in the London area. They are not expecting these to be significant because of the lack of supply.
RICS UK Market Survey has recently shown buyer enquires stalling, sales volumes stagnating and sentiment turning altogether more cautious as a result in the final quarter of the year. They say stock on estate agents books close to all-time lows.
Tarrant Parsons, RICS Economist, commented, "Following a pretty lacklustre finish to 2017, the indications are that momentum across the housing market will be lacking as 2018 gets underway. With several of the forces currently weighing on activity set to persist over the near term, it’s difficult to envisage a material step-up in impetus during the next twelve months. However, the fundamentals are not much changed from the end of 2017, so levels of activity should soften only marginally when compared to the year just ending. A real lack of stock coming onto the market remains one of the biggest challenges, while affordability constraints are increasingly curbing demand in some parts. Given these dynamics, price growth may fade to produce a virtually flat outturn for 2018.
"That said, despite the recent interest rate hike, mortgage rates are set to remain very favourable, with the prospect of further rises seemingly minimal over the coming year. Alongside this, government schemes such as help to buy should continue to provide some support to sales activity."
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ChiswickW4.com is the only place that you will find detailed analysis of the Chiswick property market.
Roughly speaking the post code sector areas are as follows:
1 - Bedford Park and the north side of the High Road
2 - The south side of the eastern end of the High Rd down to the river at Corney Reach
3 - The Grove Park area and over to Strand on the Green
4 - The west of Chiswick between the A4 and Chiswick High Rd - (a high concentration of flats)
5 - The north west of Chiswick - Acton Green mainly