Q I am planning on getting my first home in London and I just wanted to know whether you think that I should push through with this plan before the government ends the stamp duty holiday.
I don’t have any background in property and I don’t know how the market is doing right now, considering the current effect of Covid-19 as well as the post-Brexit effect on the prices of properties in London. Do you think that London property prices are going to fall? I have heard about the deurbanisation effect of Covid-19, where people start to consider moving out of London as more and more people and businesses can work from home – will this create a drop in London property prices soon?
Will the aftermath of Brexit create a sharp drop in London property prices, since the demand is lesser now compared with how it was before Brexit? Should I wait a bit longer, hoping that the property prices in London will drop soon?
A I’m afraid that my crystal ball has failed to reveal data on future London property prices and I’m not sure that me hazarding a guess as to whether prices will fall or rise would be particularly helpful. But I can tell you that the estate agents Chestertons predicts that house prices in Greater London will drop 2% by the end of 2021 but with the caveat that “central London and other high-value locations are likely to fair better and we [Chestertons] expect prices to stabilise and even rise by 2% in some high-value locations”.
The notion that which bit of London you want to buy in makes a big difference to what house prices will do is borne out by historic data published by Foxtons – another estate agent. For example, in Kennington in south London, the average sold price has fallen by 3.12% over the last seven years, while in nearby Westminster it has gone up by 18.3%. Over in Islington, the average sold price has increased by 1.69%, although this is a mere drop in the ocean compared with the 50% increase in Dulwich.
How much of those rises and falls are Covid-related it is hard to say. However, research by the estate agent chain Benham and Reeves has found that more than a third of London homebuyers no longer think that living near a tube stop is an important factor because Covid has meant that they now work from home most of the time.
As far as the Brexit effect goes, Chestertons says: “Brexit is unlikely to have much short-term impact on the housing market.”
And as far as whether you should push on with your plans to buy your first property in London goes, you don’t need to worry unduly about the stamp duty land tax holiday coming to an end. Because you are a first-time buyer – and assuming that you are buying your first home at a cost of less than £500,000 there is no SDLT to pay on the first £300,000 of the purchase price. You will pay 5% on the amount between £300,000 and £500,000.
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