(Bloomberg) — Asking prices for London homes declined in March as affordability constraints and pre-election jitters denied the property market its usual spring boost.
Prices demanded by sellers fell 0.4 percent following a 2.8 percent jump in February, property website Rightmove Plc said Monday. It was the first decline seen in March for three years and took the average London house price to 580,308 pounds (R10.65m).
“This month fits the consistent pattern of ebbs and flows in many different localities within the overall London market, with prices still going up in some better-value boroughs and still going down in others that have overshot,” Rightmove Director Miles Shipside said in the statement.
Near-record house prices and lending curbs introduced by the Bank of England last year are making it hard for first-time buyers, Rightmove said. At the top end of the property market, the prospect of a “mansion tax” if the Labour opposition wins the May 7 election and recent changes to the stamp-duty system are weighing on demand. Under the overhaul introduced in December, buyers of homes costing more than 937,500 pounds pay more tax.
Asking prices in inner-London boroughs fell 2.2 percent in March, while outer regions of the capital rose 1.5 percent.
Rightmove warned, however, that demand continues to outstrip supply in many location and buyers are putting down bigger down payments. In addition, pressure is building in the buy-to-let sector from people who plan to use their retirement savings to purchase property when new pension freedoms come into effect next month.
“With new-build levels remaining low and only a small increase in properties coming to market compared to last month, the supply side is still a critical but missing part of the jigsaw if pent-up demand is to be satisfied,” Shipside said. – BLOOMBERG
