[vc_row type=”in_container” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ width=”1/1″][vc_column_text]A succinct weekly take on the London property market and a roundup of headlines from market observer John Lim. Subscribe to the Friday Roundup here http://pbra.in/1Gli7UL
* Many news reports point to a glut in supply of new-build luxury homes that had been sold off-plan, which will be coming online over the next few years.
* One report by data companies Lonres and Dataloft calculated 54,000 homes planned or under construction in prime areas of London, most of them priced at the £1m mark.
* Another report by property consultancy Arcadis puts the number of luxury homes at 35,005 as of the end of 2015, with around half to be delivered by 2018.
* I turned to Land Registry data to investigate the demand for £1m+ homes, downloading the raw line-by-line transactional data from the website.
* Looking at transactions within Greater London, a total of 12,069 properties changed hands in 2015 at the £1m and above price point.
* Drilling deeper into the numbers, the majority were for freehold properties, and for houses rather than flats.
* More worryingly, new-build transactions accounted for only less than 11 percent of transactions, at 1,309 for the year.
* This makes sense: from anecdotal evidence most buyers prefer period freehold properties, which possess character and have scarcity value, compared to new-build flats.
* It looks highly likely that there is a substantial demand and supply mismatch in luxury new-build flats coming to market.
* Based on half of 35,005 being delivered in the next two years, assuming a constant market demand of 1,309 properties per year, that means the market is oversupplied by over a factor of 6.
* How this translates into price movements will depend on the actions of vendors, most of them foreign investors who would be boosted by the weak pound.
Here’s a roundup of on what we think are the big news stories this week:
* BoE launched its biggest stimulus package since the financial crisis, with an interest rate cut to 0.25% and a £70bn bond-buying scheme.
* Growth forecasts have been downgraded from 2.3% to 0.8%, with a quarter of a million job losses expected in the UK. BoE governor Mark Carney also left the door open for further action if required.
* The Mayor of London is consulting on a non-negotiable 35% flat rate affordable housing tariff, rising to 50% in the long-term.
* The co-head of London offices at Colliers reports that 12 of 15 deals that had fallen through in the aftermath of Brexit are now going ahead.
* Buy-to-let landlords could face a green tax of up to £5,000 under proposals by the Department for Business, Energy and Industrial Strategy.
* A report by flatsharing site SpareRoom.co.uk reveals an annual rent increase of just one per cent, as rents push against affordability limits
* You can now book a Pokemon Go tour of London for £66: http://pbra.in/2ayW3ls[/vc_column_text][/vc_column][/vc_row]