Concerns Raised About 'Unsellable' Flats Being Built in Ealing
Deal or No Brexit deal local property market faces uncertain future
Despite the average price of a home in the Ealing area reaching record levels earlier this year and remaining high according to the latest figures some local agents are voicing concern about the future for local property.
The level of sales continues to be low particularly for flats and this is driving up the average as higher priced houses are making up a higher proportion of properties sold.
Despite the economic uncertainty related to Brexit, there continues to be strong demand for large family houses in the area with four properties selling for over £2,000,000 in W5 in the second quarter of this year. The top price paid was for a detached house in Carlton Gardens which went for £2,500,000 having been originally listed for £2,750,000.
Overall the average price in the W5 postcode area was £742,462 in the three months to June down by 5.9% compared to the same period last year.
Only 80 sales were reported to the Land Registry during the period with flat sales markedly slow although a flat did sell in Dickens Yard for £1,900,000. Only two sales of new build units were reported.
There is widespread concern about the ability of the market to absorb the large number of flats due to be built in Ealing especially those in central areas. One local estate said, “The number of flats selling outside the Help To Buy scheme at the moment is minimal and the big problem that Ealing has is that much of the supply planned for the central area would be priced above the threshold to qualify for government support. In addition there is a problem with competition between the primary and secondary market. Changes on the rules on buy-to-let have meant that this is a less attractive option for many investors and they are looking to offload properties. These can be very attractively priced compared to brand new units, for instance a number of flats in Dickens Yard have come on the market which offer much better value than that being indicated for developments yet to be completed. There has to be a worry that the flats in some developments will be unsellable even assuming the economy isn’t driven into a brick wall”
Source: Land Registry
The Help to Buy scheme offers buyers in London a 40% equity loan underwritten by the government for purchases up to £600,000 but no support above that. There were 7 flats reported as being sold in Ealing so far in the second quarter, four of which were in Dickens Yard. The Ealing Filmworks development marketing web site shows just one unit available for less than £600,000. The project is due for completion next year.
It is widely speculated that the government are pressuring the banks to continue extending credit to developers to ensure that housing starts remain as high as possible even when the prospect of strong sales looks bleak.
Local agents are hoping for some respite from Boris Johnson. One said, “A no deal Brexit will be a catastrophe but if it is accompanied by a property market collapse it will also entail a new banking crisis. Boris knows that he has to support the property market to stop this happening and it is likely that his first action would be to raise the stamp duty threshold to £500,000. This will help but he would need to do more.”
In West Ealing the property market has proven to be more robust with prices in the W13 postcode area rising by 3.3% to £663,558 over the last year. Larger houses remain popular here as well with three homes on Culmington Road, Elers Road and College Road tying for the most expensive property sold during the quarter by changing hands at £1,650,000.
Local agents appear to be more sanguine about the area with one pointing out, “It is not hard to see why developers are now focusing on West Ealing and lots of new plans are being revealed. All these units will benefit from taxpayer underwritten loans and therefore sales are virtually guaranteed.”
Source: Land Registry
According to the Nationwide House Price Index the average sale price in London was £465,722 down by 3.8% in the second quarter compared to the previous three months. Over the last year prices are down by 0.7% This is the eighth consecutive quarterly decline for London in a row. Moreover, prices in the capital are still only around 5% below the all-time highs recorded on Q1 2017 and c50% above their 2007 levels (by comparison, UK prices are only around 17% higher over the same period).
For the UK as a whole the average sale price was up by 0.4% over the last year to £215,910 with Northern Ireland seeing the strongest performance.
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said, “Survey data suggests that new buyer enquiries and consumer confidence have remained subdued in recent months. Nevertheless, indicators of housing market activity, such as the number of mortgages approved for house purchase, have remained broadly stable.
“Housing market trends are likely to continue to mirror developments in the broader economy. While healthy labour market conditions and low borrowing costs will provide underlying support, uncertainty is likely to continue to act as a drag on sentiment and activity, with price growth and transaction levels remaining close to current levels over the coming months.”
The RICS UK Residential Market Survey for the second quarter concluded, “Although anecdotal commentary from respondents remains generally a little downbeat, contributors reported a rise in buyer demand, that new instructions have held steady, and that newly agreed sales also edged into positive territory for the first time in twenty-eight months.”
August 8, 2019