London house prices: Can stamp duty save the capital from a demand crisis?
Demand for houses has been falling in the housing market for six months, or eight if you live in London. It doesn’t feel so long ago we were talking about booms and whispering of bubbles, but that's gone for now.
The latest figures from the Royal Institute of Chartered Surveyors reveals that 10 per cent more surveyors reported weakening demand in December than a month earlier. The weakest place in the country? The powerhouse, London. 45 per cent more surveyors reported a fall in enquirers in the capital, its eight consecutive month of decline.
House prices are going in the same direction, with the Office for National Statistics reporting 10 per cent growth for the UK in the year to November. It was 10.4 per cent in October.
There is light at the end of what could melodramatically be called a small tunnel: stamp duty reforms have injected some optimism: RICS believes there is a chance that the changes in the tax will lead to a two to five per cent increase in the number of sales over the next 12 months.
In London, however, members believe that sales will fall by between five and 10 per cent and prices by 2-5 per cent.
Simon Rubinsohn, RICS chief economist, saw the amount of housing stock as the biggest issue, an opinion he is not alone in holding.
The changes to stamp duty are expected to provide a timely boost to activity in the housing market across most of the country but there remain significant challenges particularly for first time buyers seeking to take an initial step onto the property ladder.
Critically, the stock of property on the market continues to hover close to historic lows with new instructions to agents falling in ten of the last twelve months. Indeed, there is a risk that with so little housing available any pick-up in demand could rapidly feed through into higher prices rather than higher sales.