Sellers are “shooting themselves in the foot” by not lowering their price expectations as London establishes itself as a buyers’ market, according to Rightmove's latest house price report.
The average difference between the final asking price and the amount homes actually sold for was £27,000 in the first three months of the year, with a drop of 4.4 per cent taking the average asking price of a London home to £628,000.
In contrast, at the start of 2014, when buyers were competing furiously for London homes in the rapidly rising market, the difference between asking and sold prices was just 1.1 per cent, property website Rightmove found.
This is because many sellers have yet to adjust their expectations in line with what buyers can afford to pay now, according to agents.
“We are always telling vendors to be realistic and price their property keenly to fuel interest,” said Lucy Pendleton, co-founder of estate agent James Pendleton.
“However, many don’t and this is a favourite way for vendors to shoot themselves in the foot. The difference between asking and sold prices proves just how many houses have been priced badly recently and that always happens when we see a shift from a sellers’ to a buyers’ market in London.”
Central London estate agent and NAEA board member Jonathan Hudson attributed the slight drop in house prices to the stamp duty changes and political uncertainty affecting the central London property market, and pointed out that this uncertainty had yet to impact the cheaper outer London boroughs as severely.
“The central London market has seen a gradual slowdown since April 2014 when the market was at its highest point,” he said. “This was when the highest rates of stamp duty started kicking in, which specifically affected central London.
“Everything happens here first. Even though we’ve slowed down there are still areas feeling the extended ripple effect of central London from four years ago.”
LONDON'S TOP-PERFORMING BOROUGHS
Prices in travel Zone 1 dropped the most, falling 4.3 per cent to £1.3 million, while prices in Zone 6 fell by just 0.5 per cent.
The areas where prices rose compared to a year ago were among the cheapest boroughs in London.
London’s cheapest borough, Barking & Dagenham, recorded an average price of £316,000, while Bexley in south-east London had an average asking price of £409,000, both two per cent higher than a year ago.
New record high prices were reached in the boroughs of Greenwich, Waltham Forest and Hillingdon – all of which have average house prices below £500,000.