London real-estate agents have begun to offer free cars worth ￡18,000 (US$23,369), stamp duty subsidies of ￡150,000, and free Apple Inc iPads and Sonos sound systems to boost sales in the British capital’s increasingly moribund property market.
The once super-hot central London market has turned into a “burnt-out core,” buying agents Garrington Property Finders Ltd said, prompting developers to offer ever-greater incentives to lure buyers.
At one development in Muswell Hill, a relatively affluent part of north London, sales agents last week said they would be giving away a Renault Zoe electric car, priced at ￡18,045, to every buyer.
Photo: Bloomberg
They said they would also pay stamp duty on the ￡1.99 million homes, at ￡153,000.
Apart from the free prosecco and gourmet pizzas available to people viewing the properties, anyone willing to put down a ￡2,500 deposit at the development’s launch night would also walk away with a free iPad, they said.
The developer, Jamm, says that sales are robust and that “this is absolutely not a sign of desperation.”
“There is a lot of nervousness out there with the election and Brexit, and buyers are looking for excuses not to buy. We’re giving them reasons to buy,” Jamm director Tim Jackson said.
Free furniture packages worth up to ￡20,000, John Lewis vouchers and free three-year travel passes have all been offered to potential buyers in other developments across the city.
Property agent Henry Pryor said that there is a pipeline of 59,000 high-end apartments under construction in London alone, yet annual sales of new flats in the city are only 6,000.
“Developers will sell their first-born to shift them. It’s last-chance-saloon stuff. About the only incentive they have not tried is a BOGOF [buy one, get one free],” Pryor said.
The developer behind the giant Battersea Power Station development of 4,360 apartments in south London last week slashed its profit forecasts amid rising costs and wider economic uncertainty.
House prices have begun to fall nationally — Nationwide Building Society said typical prices fell in both March and last month — and the steepest drops have been seen in London.
UK Land Registry figures show that in the heart of the city’s financial district, average property prices plummeted from ￡861,000 at the time of the EU referendum in June last year to ￡773,000 in February, a decline of 15 percent, although in London’s outer boroughs prices are still up over the year.
Transactions — the lifeblood of real-estate agents, who rely on turnover rather than high prices to make money — have also fallen steeply.
Garrington said the “hipster hotspot” of Hackney last year saw sales collapse by more than a third and there have been few signs of a recovery since.
LCP Management Ltd, a property investment company, blamed big hikes in stamp duty for a collapse in sales.
It said that in central London, sales of new flats were down 41.4 percent in the last three months of last year compared with the previous year, while average prices fell 8.7 percent over the same period to ￡1.9 million.
Chinese buyers had melted away, Pryor said. “The Chinese are finding it more difficult to borrow from their own banks and the gloss has gone off the London market. Foreign buyers were a very significant part of the new-build market, but they can’t get a yield, and they now can’t flip them for capital gain.”
Pryor said it could be years before prices for new-build flats start rising again. “If you could short new-build property, then you would make a mint, but there’s no market. In my 28 years in the property business, we have done this twice before and each time it takes around five to seven years before things recover.”
However, tenants are winners from the post-Brexit decline in the property market. Rents in London have fallen sharply, with new tenants in the city typically paying almost ￡100 per month less than their counterparts a year ago.
The average monthly rent in the capital dropped from ￡1,297 a year ago to ￡1,203 in March, said Your-move.co.uk Ltd, which publishes a regular buy-to-let index.
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