|Average Chiswick Property Price Drops by a Fifth|
Brexit and Stamp Duty concerns weigh heavily on local property market
The latest figures on the Chiswick property market show an alarming drop in the average price with a 20.1% fall in the second quarter.
The decline has more to do with a change in the proportion of types of properties being sold than an across the board fall in values. 70% of transactions recorded during the period were for flats and maisonettes, the highest ever share of the market that this kind of home has ever achieved.
At the same time transactions at the upper end of the market have ground to an almost complete standstill with local agents saying that sales of this kind of property generally were rushed through to take place in the earlier part of the year to avoid stamp duty increases.
The top priced property during the period changed hands for a relatively modest, by recent standards, £2,250,000. The house was a five bedroom semi-detached property on Burlington Gardens that had earlier been marketed at £2,400,000.
In combination, these two factors have driven the average price down to £741,700 from levels over £1,000,000 previously. However, given the reasons for the fall it cannot be assumed that an individual property will have fallen in value to the same extent.
In fact the market for smaller properties appears to be holding up well with the average price of a flat actually rising during the second quarter to £548,323.
Local agents feel that the Stamp Duty changes have had the bigger impact on prices during this period as opposed to concerns about Brexit. The consensus view is that the EU Referendum has resulted in a further decline in transaction levels in a market that was already seeing relatively low turnover. So far this year two estate agents have closed their branches in Chiswick with more predicted to follow. Only 70 sales have been reported in the three months to the end of June and, although this figure is likely to be revised up, this represents a substantial decline in sales compared with the same period last year.
A national chain of estate agents has been widely quoted as saying that Chiswick property prices have fallen a further 12.9% post-Brexit but local agents have generally being dismissive of this figure saying that volumes are now too thin to measure the price level of the market. Stock levels have fallen substantially with buyers expecting a post-Brexit discount and sellers withdrawing from the market.
Peter Shaw of Peter Shaw Property said, "Although there has been much speculation and fear spread by Brexit and a noticeable buyer reticence throughout Q2, I am quite optimistic about the next 12 months. I have seen a renewed appetite developing with foreign currency buyers eyeing the weaker pound as well as recent stirrings within the domestic investor market as prices have softened slightly and a seller realism is developing within the market.
"The private residential market will soon settle once the wheels of fear stop spinning, as life just needs to go on. The London market needs an occasional correction and I suspect this was occurring before the referendum and was slightly cloaked by Q1 stats which may have been distorted by the dash caused by the stamp duty rise on investment property. The Armchair property experts tend to predict a Crash & Burn scenario, whenever possible, but often fail to acknowledge the amazing resilience of the West London market, often predicting a large drop in values, but forgetting about the inherent cutoff point at which sellers will simply rent out their property and wait until the market firms up, thus removing them from the sales market and effectively shortening supply."
He added, "
Chiswick is and always will be a very attractive place to live and the smart buyers and investors will never forget this."
Across the whole of London Prices rose by 12.6% over the twelve months to June bringing the average price up to £472,204. Prices rose marginally during the month of June.
For the UK as a whole there was an annual price increase of 8.7% which takes the average property value to £213,927.
Following a strong increase in sales in March, UK home sales fell by 55.4% in April 2016, recovering slightly in May and June 2016. The swings in volume are believed to be primarily due to Stamp Duty changes. This was mirrored in London where 14,783 sales were recorded during March but this fell to 4,368 in April.
The latest report from the Royal Institution of Chartered Surveyors (RICS) has concluded that housing market activity has softened with sales and interest from new buyers continuing to wane. They say sales and enquiries continue to display a negative trend in London - although expectations point to a more stable picture in the coming months. Stock levels in the capital are at record lows and new instructions have declined markedly. Across London, 42% more surveyors reported a fall in transactions; the fifth month of decline.
The RICS say that this reflects a continuation of a trend that started in March following the implementation of the tax surcharge on investment purchases. Anecdotal reports provided by contributors to their survey suggest both the tax change and the ongoing fall-out from the EU referendum are contributing to the current mood in the market. However, looking a little further out, London has seen a notable turnaround in sentiment for the year ahead, as confidence towards the outlook for transactions climbed to a seven month high.
Simon Rubinsohn, RICS Chief Economist, commented: “The housing market is currently balancing a raft of somewhat mixed economic news alongside the latest policy measures announced by the Bank of England, which have already begun to lower cost of mortgage finance. Against this backdrop, it is not altogether surprising that near term activity measures remain relatively flat. However the rebound in the key twelve month indicators in the July survey suggest that confidence remains more resilient than might have been anticipated.“
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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