London estate agents have begun to offer free cars worth £18,000, stamp duty subsidies of £150,000, plus free iPads and Sonos sound systems to kickstart sales in the capital’s increasingly moribund property market. The once super-hot central London market has turned into a “burnt-out core” according to buying agents Garrington Property Finders, prompting developers to offer ever greater incentives to lure buyers.
At one development in Muswell Hill, a relatively affluent part of north London, sales agents said this week they would be giving away a Renault Zoe electric car (RRP £18,045) to every house buyer. They would also pay stamp duty on the £1.99m homes, at £153,000.
Apart from the free prosecco and gourmet pizzas available to those viewing the properties, anyone willing to put down a £2,500 deposit at the development’s launch night this week will also walk away with a free iPad.
The developer, Jamm, insists that sales are robust and that “this is absolutely not a sign of desperation”. Director Tim Jackson said: “There is a lot of nervousness out there with the election and Brexit, and buyers are looking for excuses not to buy. We’re giving them reasons to buy.”
Free furniture packages worth up to £20,000, John Lewis vouchers, and free three-year travel passes have all been offered to potential buyers in other developments across the capital.
Property agent Henry Pryor estimates that there is a pipeline of 59,000 high-end apartments under construction in London alone, yet annual sales of new-build flats in the city are only 6,000. “Developers will sell their first-born to shift them. It’s last-chance-saloon stuff. About the only incentive they have not tried is a bogof [buy one, get one free].” The developer behind the giant Battersea Power Station development of 4,360 apartments in south London last week slashed its profit forecasts amid rising costs and wider economic uncertainty.
House prices have begun to fall nationally – Nationwide said typical prices fell in both March and April – and the steepest drops have been seen in London.
Land Registry figures show that in the heart of the city’s financial district, average property prices plummeted from £861,000 at the time of the EU referendum to £773,000 in February, a decline of 15%, although in London’s outer boroughs prices are still up over the year.
Transactions – the lifeblood of estate agents, who rely on turnover rather than high prices to make money – have also fallen steeply. Garrington said the “hipster hotspot” of Hackney saw sales collapse by more than a third in 2016, and there have been few signs of a recovery since.
LCP, a property investment company, blamed big hikes in stamp duty for a collapse in sales. It said that in central London, sales of new flats were down 41.4% in the last three months of 2016 compared with the previous year, while average prices fell 8.7% over the same period to £1.9m.
Chinese buyers had melted away, Pryor said. “The Chinese are finding it more difficult to borrow from their own banks and the gloss has gone off the London market. Foreign buyers were a very significant part of the new-build market, but they can’t get a yield, and they now can’t flip them for capital gain.”
Pryor reckons it could be years before prices for new-build flats start rising again. “If you could short new-build property, then you would make a mint, but there’s no market. In my 28 years in the property business, we have done this twice before, and each time it takes around five to seven years before things recover.”
But tenants are winners from the post-Brexit decline in the property market. Rents in London have fallen sharply, with new tenants in the capital typically paying almost £100 a month less than their counterparts a year ago.
The average monthly rent in the capital dropped from £1,297 a year ago to £1,203 in March 2017, said Your Move, which publishes a regular buy-to-let index. In March alone, typical rents in the capital fell 6%, it added.
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