Flat sales in London down 47% in 12 months According to new research, a major indicator of fi rst time buyer demand in the capital is fl ashing red as fi rst-time buyers sit on the sidelines waiting for a better deal. The warnings suggest that sales of flats across London have collapsed 47% in only a year. It says the London market has been overvalued for at least three years and buyers are reluctantly waiting for prices to come down to more realistic levels. Flats are a mainstay of the fi rst-time buyer market and dramatic fl uctuations in buying activity and sentiment can have consequences for the market as a whole. The number of fl ats sold in July 2016 was 4,709 but by July 2017 this had dropped to 2,494, according to latest fi gures. While fl at sales tumbled, transactions on other types of property also fell but not so severely. The number of detached properties sold fell 5% in 12 months to 143 in July this year, semi-detached sales were down 1% to 516 and sales of terraced houses down 8% to 1,476. Over the same period sale prices of fl ats crept up 2%, terraces rose 3%, semis gained 13% and detached houses fell 5%. In the previous month - June 2017 - sales of fl ats were 43% down on June 2016, potentially pointing to a market that is prone to a well-overdue correction in prices. It comes despite latest fi gures revealing fi rst-time buyers in the capital borrowed 8% MORE in the second quarter of 2017 compared with the previous year. Experts suggest this points to fewer fi rst-time buyers at the bottom end of the market being able to transact at all, while those in a better fi nancial position continued to buy further up the ladder with many taking advantage of the Help To Buy scheme. Despite a persistent housing crisis in the capital, many fi rsttime buyers believe prices are simply too high and are unable or unwilling to meet such steep valuations even in a cheap lending environment. 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. When that happens it can only be a good thing, because housing markets are most stable when transactions are healthy across the board. A reality check is in the offing af ter 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.
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