Sep 12, 2018
Prices Drop More Than Three Percent Over A Single Month
The “late summer sale” is a common phenomenon whereby prices dip every August. But this year has seen the sharpest fall since the millennium.
For Londoners considering putting their properties on the market, the time could be here to stop thinking and start doing. That’s the consensus from experts in the capital who have seen the most dramatic “summer sale” figures since Rightmove started collating records.
A drop in prices at this time of year is nothing unusual. Arsenal estate agents say it is a phenomenon that is seen every August as the peak period for house sales draws to a close and sellers that have not yet managed to cut a deal seek to stir up interest among potential buyers. However it is the size of the fall that has got commentators talking, with the average asking price in the capital falling 3.1 percent between July and August.
Hang on in or sell?
When your property is your home, the peaks and troughs that the market goes through are of passing interest but only really become important when you are either looking to sell or remortgage. However, for the growing number of private landlords with money tied up in London property, the question is a fundamental one.
If you are in this position, you need to monitor price fluctuations with the same intensity as someone investing in stocks, commodities or Forex – and with the same willingness to buy or sell on the basis of what the financial indicators tell you.
So what are they saying now? The drop in prices has, as ever, been brought about by a number of factors. If it was just the summer sale effect, it would be “business as usual” and nobody would bat an eyelid, but the current malaise is the natural conclusion to a slow down that has been rumbling along since the beginning of the year.
When prices rise in the way they have been doing in the capital over the past five years or so, there inevitably comes a point where things hit a ceiling, and that seems to have happened. Prices across the country have continued to rise, particularly in booming cities like Manchester and Edinburgh. However, this has been at the expense of London, where both investors and residents have decided the time is right to cash in and move to one of these alternative locations where you can get a lot more property for the same money. The result? A distinct slow-down in the London market, while the booming cities further north just get hotter and hotter.
What happens next?
Any investor knows that while analysing what is happening right now is interesting, it is only useful if it tells us something about what is going to happen next. As far as the London market goes, the arguments in favour of selling are compelling ones. The pattern seen over 2018 to date seems set to continue, and there is an additional factor that should not be forgotten. Next year will see all the Brexit discussion become a reality, and it is still not clear how this will affect London prices. However, this uncertainty, in itself, will make property investors who are already nervous even more jittery. Now could be the perfect time to get that property on the market.