Could W4 Property Demand 'Fall off a Cliff' After Flat Buying Binge?

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Local agent says 50% of Chiswick flats are owned by buy-to-let investors

The Chiswick property market is seeing a flurry of buying interest in flats as investors look to avoid a forthcoming rise in stamp duty but concern is being expressed that there could be a sharp fall in demand once the higher rates come into effect in April.

The latest figures from the Land Registry show that property prices in Chiswick rose by 7.3% in 2015 with the average remaining close to the million pound mark at £962,268.

Flat prices rose by only 3.2% over the same period but local agents are reporting brisk activity in this sector of the market since the New Year due to the planned increase in stamp duty for the sale of a second property. Buy-to-let investors will be required to pay 3% more in stamp duty charges than residential buyers looking to purchase the same home.

Christian Harper of Harper Finn said that at first it appears reasonable that anyone who can afford to buy a second property should be taxed more. However, he points out that about 50% of flats in Chiswick are owned by people looking to provide themselves with a pension by investing in a flat.

"If the cost of buying these flats in Chiswick becomes too high to tolerate I believe that the overseas market will begin to look more attractive and demand will fall off a cliff. If this happens, yes our children could buy a property at a much cheaper price, however 100% of people who currently own a property would be affected."

He added that so many people use the equity in their current property to fund spending on a new car, or kitchen extension that they rely on property prices to remain strong.

"I do support the efforts by government to curb the UK’s desire to buy more and more property to make money, however I think that simply taxing such a small section of the market is a blunt instrument and is bound to have a negative affect.  George Osborne himself stated that raising income tax would reduce the amount of tax receipts so why does he feel that it will work in the property market?

Another agent pointed out that the higher cost of moving was bound to result in a slowdown in the property market.

Compared to a year ago, million-pound properties had slipped back 2 per cent in London since stamp duty reform levied higher taxes at the middle and top-end of the property market. It remained to be seen how the second wave of stamp duty change targeted at buy-to-let investors might similarly distort the market, although there was likely to be a short-term "rush" before the deadline, he said.

James Mathews of Whitman & Co expects the recent flurry of activity ranging around the sales of flats to scale down by the end of February, ahead of the expected 3% stamp duty rise in April. "I think we will have a stable year and Chiswick will continue to be popular. Obviously there are concerns about what's happening in the Middle East and over oil prices etc but prices were quite stable last year and I see that playing out over the coming year too."

The average Chiswick property sale price dipped below the million pound mark in the last three months of the year and sales volumes also fell with houses seeing a bigger drop off than flats. The top priced home sold during the last quarter of 2015 was on Bedford Road in Bedford Park. The Grade II listed 5 bedroom house changed hands for £3,317,000. However terraced homes and flats have proven to be the most resilient to change, and show a fall of less than 1 % in the last quarter, despite overall property sales being down by nearly 20%.

Property prices across London rose by 12.4% in 2015 according to the Land Registry bringing the average price of a home in the capital up to £514,097. This was the highest rate of increase in the country.

The average property value in England and Wales was up by 6.4% £188,270. Monthly house prices rose by 1.2% since November 2015.

Sales and repossessions during October 2015, the most up-to-date figures available, show that the number of repossessions in London fell by 71%

The London housing market has seen a fall in newly agreed sales for a third month in a row according to the latest RICS UK Residential Market Survey. Despite an increase in demand across the capital 2% more surveyors have seen a fall in newly agreed sales over the last month, adding to the picture from October and November.

Their report for December 2015 has shown that demand for new properties has reached a three-month high, with Chartered Surveyors citing a rush to beat April’s stamp duty rise as the reason.

From April, buy-to-let investors will be required to pay 3% more in stamp duty charges than residential buyers looking to purchase the same home. Since the Chancellor announced these measures in the Autumn Statement last November, 10% more Chartered Surveyors in London reported a rise in new buyer enquiries but with new instructions flat prices are continuing to rise - average sales per surveyor are at just half of what they were in June 2014.

RICS Chief Economist, Simon Rubinsohn said, “The housing market has experienced an unusually buoyant December. Those in the industry have been speculating that this is the result of the Chancellor’s announcement last November. Potential buy-to-let investors are looking to pick up properties before the increased stamp duty levy comes into force in April. If that is the case, then we can expect to see the housing market heating up further over the next few months.”

The survey also predicted that house prices in London look set to rise by a further 5% per annum in each of the next five years, compared to a UK average of 4.5%, with 57% of contributors in the capital believing that property was either ‘expensive’ or ‘very expensive’.

A net balance of 25% of respondents reported that London house prices had risen since November, substantially lower than the national average of 50%, however price expectations remained strong with a 30% more London surveyors predicting a rise rather than fall in prices over the coming three months.

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ChiswickW4.com is the only place that you will find detailed analysis of the Chiswick property market.

Chiswick Property Prices - (October - December 2015)
Area	Detached	Sales	Semi-Det	Sales	Terraced	Sales	Flats/ Mais	Sales	Overall Ave	Total Sales
W4 1	2483500	2	2438950	7	1311444	9	639373	15	1316159	33
W4 2	0	0	1404433	3	1267197	15	614454	13	1006747	31
W4 3	2041667	3	1361666	4	930500	10	505297	17	866668	34
W4 4	0	0	1693875	2	1350000	1	559166	20	692220	23
W4 5	0	0	1900000	1	1181500	16	596756	22	870067	39
Total	2218400	5	1883551	17	1183725	51	580235	87	962268	160
Change in Quarter	2.7%	25.0%	-10.9%	-39.3%	-0.6%	-13.6%	-0.7%	-19.4%	-4.8%	-19.6%
Change in year	95.3%	0.0%	3.1%	-10.5%	6.9%	-19.0%	3.2%	-9.4%	7.3%	-12.6%
Change in three years	-14.6%	0.0%	28.5%	13.3%	43.6%	-26.1%	40.8%	-13.9%	37.0%	-15.8%
Change in five years			93.3%	-43.3%	64.2%	-28.2%	40.4%	-3.3%	56.3%	-16.2%
Change in ten years			180.1%	-43.3%	134.4%	-44.0%	110.2%	-39.6%	140.8%	-39.6%

Roughly speaking the post code sector areas are as follows:

1 - Bedford Park and the north side of the High Road

2 - The south side of the eastern end of the High Rd down to the river at Corney Reach

3 - The Grove Park area and over to Strand on the Green

4 - The west of Chiswick between the A4 and Chiswick High Rd - (a high concentration of flats)

5 - The north west of Chiswick - Acton Green mainly

February 13, 2016