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Half London homes on market for longer than 3 months
Mira Bar-Hillel, Property Correspondent4 Sep 2008
More than half the properties for sale in London have been on the market for longer than three months, figures show today.
The proportion of "stale" properties in the capital has jumped by almost 20 per cent since the start of the year. In January 32 per cent had gone unsold for more than 90 days. Last month that figure was 51.2 per cent.
It is more evidence that the homes market is paralysed by "brickor mortis" - when sellers hold out for the right price but buyers struggle to get a mortgage and wait for prices to fall further.
Property website Globrix found the highest proportion of stale properties were in Tower Hamlets and Kingston, where they now make up almost two thirds of the homes for sale.
In Kingston, the proportion has doubled since the beginning of the year from 31 to 62 per cent while in Croydon the figure went up from 18 to 43 per cent.
In Harrow it almost tripled - from 20 to 56 per cent. Bexley was the only borough where the percentage of properties still on the market after more than 90 days has remained static, at 41 per cent.
Agents' website Rightmove, which coined the phrase "brickor mortis" said: "With the scarcity of mortgage availability and the increase in unsold property, brickor mortis is the paralysing condition of properties that stay on the market for so long that they are effectively dead in the water".
The most notable example is the former Belgravia home of London's ex-Transport Commissioner, Bob Kiley, which Transport for London has been trying to sell for a year. It remains on the market in spite of a price cut from £4.95 million to £3.5 million.
Daniel Lee of Globrix said: "The London market has pretty much ground to a halt. Transaction levels are the lowest on record so a significant percentage of properties are just languishing unsold.
"The Government's decision to axe stamp duty for properties below £175,000 for a year is unlikely to kick-start the market, as only five per cent of properties currently for sale in the capital will benefit from this tax holiday."
Tuesday's package of measures to help the market, which included tinkering with stamp duty, is expected to do little apart from unfreezing sales which had been put on hold pending the final announcement of the cut.
Peter Bolton King, chief executive of The National Association of Estate Agents, said: "The indecision over the last month, since the Chancellor first mentioned the possibility of changes to stamp duty, had a major effect on consumer confidence and killed off a large proportion of sales. So we welcome the certainty - but the measures will not have the impact needed to revive the housing market in London and much of the South-East due to the high average price of first-time-buyer properties. "In addition, the Government's offer of interest-free five-year loans of up to 30 per cent of the property's value for first-time buyers when buying a new home from developers discriminates against the second-hand market, where property will continue to stagnate."
One Londoner hit by the slump in sales is journalist Jill Starley-Grainger.
She put her Chelsea bolthole, a one bedroom flat, up for sale four months ago. The 37-year-old and her husband Tim, 34, tried to sell the flat with a 20-year lease for £299,000 but they have had to cut £50,000 off the price.
'We're in the nightmare scenario. No one will buy'
PHIL SMITH has found his dream family home, a three-bedroom house with a garden, and has had his offer to buy accepted.
But the 32-year-old cannot clinch the deal because he is struggling to sell his two-bedroom flat in Wimbledon.
Five months after putting the property on the market at £335,000, Mr Smith and 29-yearold wife Amber are still waiting for an offer.
The couple, who have a twoyearold son Saatchi and a baby daughter Syrocco, have spent £8,000 renovating the flat.
"There are several properties for sale on our street and ours is the cheapest and the nicest and there are still no takers," Mr Smith said.
They reduced their asking price by £40,000 this month to £295,000 which would give them a profit of £61,000 after buying it three years ago for £234,000.
But Mr Smith thinks he has had no offers because first-time buyers cannot get a mortgage.
The owner of the property he wants to move to, in Wimbledon Park, has agreed to match Mr Smith's price cuts to keep his buyer.
Mr Smith said: "It's a nightmare scenario. I think he realises if the gap gets bigger, we won't be able to afford it and will drop out. Then he will be back at square one."
Reader views (24)
For me a house or flat is primarily a home, a shelter, somewhere (hopefully) comfortable to live and relax in. In terms of 'investment' - this comes a long way down the list. It seems to me that today we know the price of everything and the value of nothing.
- Philip, London, 05/09/2008 14:06
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I can understand why sellers would want to sell their homes for the amount that they paid. The many people in negative equity get my sympathy.
They were the victims of a pyramid marketing scheme that left them high and dry. Offerseas speculated distorted the market and the government did nothing to stop them.
However, when people expect to make a profit on their property my sympathy vanishes. Profiteering got us into this mess and it must stop.
- Flopsy, London, 05/09/2008 13:50
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I can get a mortgage on a property like this thanks to our high deposit (which is in cash in the bank as we sold our flat some time ago) good income and spotless credit history.
I wouldn't buy the flat because it simply is not worth £295K (regardless that other properties in the street are also overpriced).
The 'greater fool' theory of a speculative bubble works because a fool is happy to buy an overvalued asset since he knows a greater fool will buy it from him at an even higher price. This eventually collapses because the asset is so over-inflated the unsustainability is obvious. The man then left holding the asset and unable to sell is the 'greatest fool'. And that's you Mr. Smith. Sorry!
- Judith, London, UK, 05/09/2008 13:45
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So, even after a price reduction of 40,000, the Smith family is still hoping for a profit of 60,000 in 3 years, while the inflation was at an average of 2%? And we are to feel sorry for people like these? Are we to feel sorry for real estate speculators like these that have ruined the real estate market and the chances of buyers in real need of accommodation in UK to begin with? The average house price in UK and especially in London is an anomaly and an abomination and I hope that prices will drop in the next 2-3 years by at least 40-50%. Only then, the properties for sale in UK will represent their true value and speculators in this field will think twice before they gamble again. And I hope that first time buyers will be smart enough to just sit on their money for another year at least, I would even recommend two years, and only then buy something. When the banks will beg them again with good incentives and the prices will be at an all time low for the last 12-15 years. God bless the “brickor mortis”! Stop worrying for greedy speculators and real estate gamblers and be happy for the opportunities created for hard working people who will finally have a chance to buy a home.
- Daniel, London, UK, 05/09/2008 13:04
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The real reason Harrow has 'stale' properties is neither the agents nor the sellers want to face the fact that their opinion is not the value of the house. You are in a market place, let the forces of demand and supply take charge to give a real valuation. If sellers wont pay this price then the seller have the choice to remove it from the market. The fact that they haven't means they want to sell, so play the game please people.
I want to buy and have offered on a couple of house a price which I have taken from a couple of online surveyors valuation websites as the basis, with a view to being able to negotiate round this price (based on state of property and closeness to facilities such as schools, transport ets.) My offers have been rejected and the properties have not sold because they are around £100k overvalued.
To the sellers and estate agents - the game is on and the ball is in your court- either play or quit but don't stand there complaining, you are holding the rest of us up.
- Mr, Harrow, London, 05/09/2008 12:57
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£295K for a two bedroom flat, this is absurd. I wouldn't buy the Smith's flat for more than £150K
- Panos, London, 05/09/2008 12:48
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The Smith's dilemma is a classically false one. Do they really care how much they sell their flat for as long as the value of the one they are buying goes down by a proportional amount? They should lower their price until they find a buyer (probably about the value they paid 3 years ago at this point) and turn around to the owner of the property they want to buy and ask for similar discount - he has already indicated his willingness to negotiate. Most likely the transactions would then go through, and this chain would just become part of the ongoing rapid re-adjustment of prices in the market: commonly called a crash.
- Paul, London, 05/09/2008 12:36
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I wonder if these greedy arrogant scum have considered working for a living? I hope they get repossessed and become homeless. People like this do not deserve sympathy - they deserve a slap.
- Inbreda, Notts, 05/09/2008 11:47
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A home which even on the reduced price makes more than 35% in 3 years is surely a blessing not a nightmare.
- John Lloyd, Westminster, London, 05/09/2008 11:40
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'It is more evidence that the homes market is paralysed by "brickor mortis" - when sellers hold out for the right price but buyers struggle to get a mortgage and wait for prices to fall further.'
Struggle? Really? I'd add another option - that buyers realize that houses are grotesquely overpriced and refuse to support a fundamentally flawed market, knowing that (a) the crash has only just started (b) we define the 'value' NOT the estate agents/vendors (c) time is one our side.
- Darren, Plymouth, 05/09/2008 11:28
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Why should anyone expect a profit from house buying? Like any other investment prices have rises and falls. Just sell for what you paid and move on. Why should anyone kick start the market when it was rising no one suggesting dampening it, which in fact would have avoided many of the economic problems we are facing i.e the bursting of the bubble.
- David Barker, eastbourne, 05/09/2008 11:27
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It's simple; property prices rocketed because people were able to borrow the money to outbid one another and start an inflationary spiral. Banks lent unprecedented multiples of salary and high LTV percentages because they thought they could move risk off their books.
That model is dead for now (though given that memories are short it may come back, albeit probably not for a decade).
Banks are reverting to standard lending multiples of 3-3.5 times salary and given their fears about a market crash are loathe to lend more than 80% of a property's value without charging a premium to reflect the additional risk.
No amount of state intervention is going to persuade the banks to do otherwise. It's not about liquidity and it's not about banks ability to borrow - it's simply about risk, something they've fundamentally reappraised.
So prices will inevitably moderate to what people can afford with a 20% deposit plus 3.5 times their salary. Indeed the market will probably overshoot on the downside during the correction.
The government can try to buck the market but everything we learned during the early 90s suggested that is simply a way of throwing good money after bad. We're all going to have to ride this one out.
- Jonathan, London, 05/09/2008 11:17
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So welcome to the real world. The property ladder is dead, long live the property market. Anybody who bought a house in the last 5 years thinking that it could only go up, and a profit of £15-£20,000 a year was their birthright is a greedy idiot and deserves everything they are going to get. Anybody who even thinks of buying a house in the next 2 years is a bigger idiot! This is free market capitalism in action, it doesn’t give people what they want, it gives people what they deserve. Get over it.
- Robert, Manchester, 05/09/2008 11:12
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I wouldn't want to buy the Smiths' house. According to the Halifax average house prices are up just 3.2% since 3 years ago. If you include the renovations, that would make the current price more like about £249,500, much less than their asking price. I suspect the real price is much lower still, as small flats fell faster last time round and probably this time too.
- Alex, Reading, 05/09/2008 11:12
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Market forces = Fear and Greed. You feared the market would leave you behind and are now greedy. Drop your price by 60k and it will go, or risk selling it in two years for sub 200k.
London is one of the most expensive cities in the WORLD, buoyed up by financial services. Its property market is long overdue for a BIG drop
- Kg, UK, 05/09/2008 11:07
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I don't understand how making 61k profit in three years is a nightmare scenario? What is wrong with people?
- Matt, London, esher, 05/09/2008 10:51
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Have you looked at home swapping? It seems to be an additional tool in the battle to sell your property in a tough market.
- Paul Weaver, Worcester, 05/09/2008 09:29
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Market forces at work, no one complained on the way up!
- Mark, Hong Kong, 05/09/2008 02:48
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House price in London should not fall, as it is a world capital city, and people from everywhere love that city is only fair that price in property stay same or even rise.
And not to be compare with the rest of the U.K.
- Alfonso Gonzalez, puerto de la cruz canary islands, 05/09/2008 00:01
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HIPS report anyone?! Oh what taxes Nu Labor has brought...
- Jacqueline, Hampstead, London, 04/09/2008 23:07
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Yet more sob stories. Why can't people get used to the fact that properties are not currently worth what they think. The situation isn't going to get any easy any time soon. Simple, drop the price considerably to attract interest or live in it and stop moaning.
- Nick, Bermondsey, 04/09/2008 22:29
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I would not describe making a £61k profit in just 3 years as a 'nightmare scenario'.
- Bobby Gillespie, SE1, London, 04/09/2008 15:07
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You want to know why nobody is buying? Look at Phil Smith's example. He bought the flat for £234,000 and was expecting to sell it for £101,000 only 3 years later! That's a 43% increase in 3 years. While during that same time salaries / wages would have only gone up between 8-10%.
The market is simply correcting, and house owners don't want to accept that they were part of a bubble that has now burst. As soon as they start offering a realistic price their property will sell!
- Dylan, London, United Kingdom., 04/09/2008 12:34
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It is long overdue that the market should correct property prices. Hopefully they will reach a realistic level, that when things settle, those who have been priced out of the market will be in a better position to purchase.
I saw a bedsit in West Hampstead at £210 000. When that bedsit reaches £150 000, I will know that some sanity has be resumed.
There should be some way of controlling Property price rises. Over inflation must always end in burst and that means casualties all round.
- Maria, London, 04/09/2008 12:34
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