|Chiswick Flats Bear Brunt Of Brexit Uncertainty|
Prices and sales volumes tumble as buyers wait and see
A marginal fall in Chiswick residential property values overall in 2018 is masking significant areas of weakness in the local market.
The Land Registry has published numbers which show that the average sale price in the W4 post code area in the last quarter of 2018 was £998,953, a fall of 1.4% compared to the same period last year despite a recovery towards the end of the year.
However there were double digit falls in the prices of terraced houses and flats with the overall average being boosted by continuing relatively strong demand for larger family houses. The average price of a flat fell to £550,302 down by 15.9%
According to figures from the Land Registry, nine homes have changed hands in Chiswick for over £2,000,000 since the end of September out of just over 100 reported as sold.
These transactions include one in which £3,910,000 was paid for a Grade II listed detached house on Priory Avenue which was part of the original Bedford Park development and a detached house on Grove Park Road which went for just under £3,000,000.
Paul Cooney, sales director at local agent Horton and Garton, confirmed the relative strength of houses versus flats saying, “In Q4 2018, we sold 90% of the W4 properties we listed with one of our high street competitors selling 31% of their listings. The majority of our sales in 2018 were freehold family houses with families making important onward moves and buyers snapping up their forever homes. “
He believes that systematic overvaluing by some of his competitors is contributing to lower prices adding, “The practice of overvaluing is still rife with agents saying and promising just about anything to list your property. I met one local recently whose beautiful home had been reduced in price by a staggering 25% over a period of eight months.
“This particular Chiswick home owner is now seriously considering accepting an offer at far less than what I believe to be the real value of their house. Does this practice drive down prices? Yes, categorically.
“Overvaluing has a quantifiable impact on your eventual bottom line so to ensure you get the very best return for your home it must be priced with absolute precision.”
Demand for new build flats also seems to be weak with only units on the High Road, including the 500 Chiswick High Road development, selling. Once again, no sales of flats were reported in Berkeley's Chiswick Gate development. One local agent said, “The houses in the development are going because buyers know the new supply of family homes in the area is very limited so, even given the most dire outcome with the Brexit situation, they will retain their value. Also people buying houses often have the imperative of an increase in family size. On the other hand a decision to buy a flat can be postponed. For Chiswick Gate the house buyer can look south toward Chiswick House grounds but the flat buyer will tend to look north to the A4 and the Hogarth Roundabout and has decided to wait and see.”
Despite the current uncertainty for flats, there are some indications that there is pent up demand particularly if a no deal Brexit is avoided.
Edward Sainter, Office Head at Knight Frank Chiswick said, "Applicant numbers, for both apartments and houses, has increased - with record numbers registering to buy since the Christmas break across London with Knight Frank. A notable sign of good quality stock coming to the market has been the Berkeley Homes Chiswick Gate development with all 44 houses and 78 apartments having now sold. Pricing at the right level remains the key to a successful sale with buyers having more data and research available to them. Buyers have never been more knowledgeable, as they have kept a close eye on the market and will only come to see a potential new home once they believe the price is right."
Paul Cooney says, “Our West London offices have had literally dozens of first time buyer enquiries in January and February so the demand for flats is there. For the flats that are lingering on the market, I would ask if I've been promised an unachievable figure and consider whether that agency has an intelligent strategy - and your best interests - at heart.”
Tom Bill, Partner and Head of London Residential Research at Knight Frank said, "The influence of political uncertainty on the prime London property market has grown markedly in the last six months. In the first half of 2018 there were signs the market was beginning to rally as asking prices adjusted more fully to reflect higher transaction costs.
"However, with Brexit uncertainty persisting ahead of the UK’s planned departure from the EU, sales volumes in prime outer London were down by 10% year-on-year in January and the annual price decrease widened to 4.6%.
"Identifying individual factors affecting the performance of the prime London property market can be a complex task but the impact of political uncertainty was decisive during 2018. Indeed, economic sentiment indicators displayed a similar trend. The Lloyds business barometer began the year with a reading of 35% in January but had fallen to 17% by December.
"However, there are signs that pent-up demand is building.
The number of new prospective buyers registering rose by 5% across prime London markets in 2018. Indeed, the ratio of new demand to new supply rose to 4.9 in the final quarter of 2018, the highest level in four years.
Robert Gardner, Nationwide's Chief Economist, said ““Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, but forward-looking indicators had suggested some softening was likely.
“In particular, measures of consumer confidence weakened in December and surveyors reported a further fall in new buyer enquiries towards the end of 2018. While the number of properties coming onto the market also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers in recent months.”
The Bank of England’s Agents’ summary of business conditions for 2018 Q4 reported that along with low supply of houses, demand was also falling. Housing activity in southern England was muted due to uncertainty, with transactions postponed until after the EU withdrawal. The demand for new build houses remained stronger outside London, in part due to housebuilders offering more incentive to finalise sales.
The Royal Institution of Chartered Surveyors’ (RICS) UK Residential Market Survey for December 2018 reported that new buyer enquiries fell for the fifth month in a row. This fall in demand was accompanied by a lack of fresh stock coming into the market as the survey’s indicator on new instructions remained in negative territory for the sixth report in a row.
The UK Property Transactions Statistics for December 2018 showed that on a seasonally adjusted basis, the number of transactions on residential properties with a value of £40,000 or greater was 102,330. This is 3.6% higher than a year ago. Between November 2018 and December 2018, transactions fell by 0.1%.
The Bank of England’s Money and Credit latest release showed that mortgage approvals for house purchases (an indicator of future lending) were around 63,800 in December, unchanged from November, but slightly below their 2018 average of around 65,200.
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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