Spring Market Thoughts - By Adam Carey

What is really happening in the London property market this Spring? Recent press releases issued by the property portals would suggest an increasing number of listings, rising asking prices, and an uptick in first quarter sales. But does this reflect what is happening in prime London’s ‘golden’ postcodes? Our Broker Adam Carey provides his insights.

Considering sales first, the numbers are encouraging with a significant increase in new flats and houses coming onto the market and excellent first quarter results being posted by the likes of Foxtons and Dexters. In addition, with the weather improving the seasonal move from Winter to Spring/Summer gives us all a lift.

The increase in the number of transactions can be attributed to the end of the Stamp Duty holiday which was particularly beneficial to first-time buyers. During this holiday, first-time buyers would pay no stamp duty on a property with a value up to £425,000. This threshold has now dropped to £300,000, meaning buyers will go from paying nothing to £6,250 on stamp duty. This resulted in a rush to beat the 31st March deadline which created a very positive statistic. However, we have to consider the relevance of this statistic to prime central London, where the average property price is far above the threshold at £675,000.

In my opinion, the increase in the number of new listings can be attributed to a number of things:
• Vendors delaying offering their properties for sale in the expectations that the market would improve post-Covid with amongst other things the lifting of travel restrictions. However, Liz Truss’s disastrous budget in September 2022 put paid to this with the resulting significant rises in borrowing costs.
• Landlords being nervous of the implication of the Renters Reform Bill (due to have commenced, now likely to be enacted at the end of 2025) and changes to Energy Performance ratings (postponed from 2025 to 2030).
• Increases to capital gains tax.
• Reassessment from overseas owners in particular ‘non-doms’ on the benefit of owning a UK property and the implications of inheritance tax on their worldwide assets.

With the encouraging increases in the number of sales in the first quarter of this year, one would normally expect this to be a springboard to a bumper year. However, more homes for sale naturally equates to more choice for buyers.

Considering the above vendors need to accept that we are operating in a totally different market., A degree of realism has to come into play as to finding a buyer, and this requires re-evaluation as to their asking price, and more importantly expectations on the final sale price. It is worth noting that on 21st January 2025 Savills commented- ‘Prices in prime central London ended the year (2024) down -20.7% compared to the peak of the market in 2014’.

Whilst the ‘Golden Post Codes’ will remain as desirable as ever, international buyers who have been the primary cause of the upward shift in prices over the recent years are now considering the benefit of owning a home in London. An international re-alignment is currently underway both financially and politically driven by Donald Trump’s scattergun approach to his second term which is understandably causing considerable anxiety worldwide.

The UK has also become one of the most expensive places in the world to purchase a property, primarily due to Stamp Duty. As an example, the Stamp Duty payable on a £2 million property for a UK resident as their primary residence is £153,750.00 or 7.7%. This increases if you are a non-UK resident and the purchase is an additional home to £293,750.00 or 14.7% of the purchase price.

The inter-agent property portal Lonres.com allows access to some interesting data. I am not only able see the recent sale price of a property but also its marketing history. This in many instances shows an alarming result. Concentrating on properties that have been marketed for 6 months or more, the difference between the initial asking price and the final sale price can often be found to be in the region of 20%!

In a nutshell, the evidence is telling me is that there is a sales market but vendors do need to be realistic on their initial asking price. One has to accept that prices are not what they were, and it is a ‘buyers market’.

Conversely and perhaps unsurprisingly the lettings market is benefitting from many of the points I have just raised. Landlords leaving the market are conspiring to leave a shortage of stock and with the high cost of buying in the UK – and London in particular – in these uncertain times prime lets are becoming more prevalent. Using the example above of the amount of stamp duty payable on a £2,000,000 property purchase, the £293,750 of stamp duty equates to a weekly rent of £1,883 pw/£8,160pcm for 3 years (assuming no increase).

In conclusion, if you are considering a purchase then there are more opportunities now than there have been over the last few years, prices are lower and for those with cash or finance in place the are some real opportunities. For vendors, the recent decline in values signals a need for realism and expectations being re-assessed.

Adam Carey