The number of apartments being purchased in London has decreased as they are priced further out of reach for ordinary first-time buyers, new research suggests – On average, London apartments are now worth £434,587.
As of July, the number of flats purchased in the capital fell by 47% compared to 12 months prior, according to figures from Home.co.uk, whom analysed data from the Office for National Statistics. This comes amid a general slowdown in the level of transactions across the UK, and particularly in London. It found that the number of detached properties sold in the capital fell 5% in 12 months to July (2017), with sales of terraced houses down 8%.
The average price of a flat in London increased by 3.9% in the 12 months to July to £434,587, according to the Land Registry. Across the country, the price growth of flats is outstripping all other property types, partly due to a lack of supply, being led by the rises in the capital. This slowdown in sales signals that affordability has been crunched and many first-time buyers, who would typically purchase these properties, are sitting on their hands and waiting for a correction in prices.
While the Government’s Help to Buy scheme has allowed many first-time buyers across the country to get on the property ladder with a 5% deposit, the take-up in London has been far lower. The threshold of £600,000 means that many new build properties are too expensive to qualify, and analysis by the BBC earlier in the year found that while Help to Buy is used to buy one in three new-build homes outside London, in the capital it is just one in 10.
Other natural buyers of these properties, buy-to-let landlords, have also been squeezed by changes to the tax regime and many are sitting out buying opportunities or selling up their portfolios.