Buyer demand across London fell sharply in July amid political uncertainty and speculation over possible changes to property taxation, according to Chestertons.
The number of prospective buyers registering across the agency’s London network dropped by 22% year-on-year to 1,740 — the steepest fall since the 29% decline recorded immediately before last November’s Budget.
Chestertons says Prime Minister Andy Burnham’s decision to rule out stamp duty changes in the forthcoming Budget could now help restore confidence by giving buyers greater certainty.
The decline in registrations coincided with weaker national mortgage activity. Seasonally adjusted mortgage approvals fell by more than 13% month-on-month in May, their sharpest monthly decline in 44 months, before recovering by 2.9% in June.
STAMP DUTY QUESTION MARK REMOVED
Adam Jennings (main picture), Head of Residential at Chestertons, says: “The clarity provided so quickly into Andy Burnham’s tenure should, in theory, help people who are thinking of buying.
“The lesson from last year was that people don’t want to make a big decision in uncertain times when so much money is at stake. Inevitably, they are inclined to ‘wait and see’.
“By ruling out changes to stamp duty in the upcoming Budget, the Prime Minister has removed a significant question mark for buyers. Hopefully, that position remains in place for at least the next 12 months and gives the market the certainty it needs.”
There are tentative signs of improving consumer confidence. The GfK Consumer Confidence Index increased by six points in July to -17, its highest level since January and its largest monthly improvement since November 2023.
The Bank of England also held the Base Rate at 3.75% for a fifth consecutive meeting, while annual consumer price inflation eased from 2.8% in May to a 15-month low of 2.6% in June.
LETTINGS ACTIVITY SETTLES
Meanwhile, London rental demand stabilised in July following an initial rebound after the Renters’ Rights Act came into force.
Chestertons recorded a 7% annual fall in portal enquiries during July, following increases of 17% in May and 10% in June. However, applicant registrations during the first 10 days of August were 18% higher than a year earlier.
Katinka Hill, Head of Lettings at Chestertons, says: “Activity seen immediately after the legislation was introduced in May eased off in July, however in the first ten days of August our branches have seen applicant registrations up 18% year-on-year which is in line with the seasonal summer uptick we would expect at this time of year.”
Rightmove data shows London asking rents increased by 2.9% annually during the second quarter, outpacing the 2.3% growth recorded across the rest of Great Britain for the first time since Q3 2023.
