First-time buyers are abstaining from buying flats in London, according to new figures that reveal a massive slump in the capital’s property market.
Independent estate agent James Pendleton analysed data from property search tool Home.co.uk and found that between July 2016 and July 2017, flat purchases in the capital fell from 4,709 sales to 2,494; a 47% year-on-year collapse.
Flat purchases account for a significant proportion of the first-time buyer market in London.
However, sales of other types of properties, while less severe, also suffered drops. Year-on-year sales of detached properties fell by 5% in July 2017 to 143, while semi-detached sales fell by 1% to 516, and terraced house sales fell by 8% to 1,476.
‘A reality check is in the offing’
The estate agent points the blame for this collapse in flat sales to a ‘wait-and-see’ attitude from first time buyers. Lucy Pendleton, founder and director of James Pendleton, comments: “This a classic sign that first-time buyer demand is sensitive. There is a temptation to wait on the sidelines while prices become more realistic.
“A reality check is in the offing after such strong growth in London and the scale of this drop in sales of flats tells me it is now more likely to be inevitable. Solid numbers of people are showing some reluctance at current prices and signalling to all the other market participants they can’t transact unless they come back down to Earth.”
House prices in London have already seen their first drop in eight years, contributing to signs that the market in London is in the process of experiencing a correction.
This news comes despite government affirmations to provide an extra £2 billion per year to build affordable homes, an amount that experts have described as “a drop in the ocean”.