First-time buyers accounted for more than a third of purchases in Prime London in Q2, according to Marsh & Parsons’ London Property Monitor.
The increase in market share was spurred on by a reduction in competition, as property investors sought to complete transactions in the first quarter of the year – before April’s Stamp Duty change came into effect.
Representing 22% of the Prime London market in Q1 2016, first-time buyers grew their share to 34%, making them the most common buyer type.
While first-time transactions are booming, activity in London’s buy-to-let market slowed from Q1. Landlord interest cooled in to just 13% of sales in Q2, down from 36% in Q1 as investors rushed to purchase before the Stamp Duty change.
David Brown, CEO of Marsh & Parsons, explained the effect of the Stamp Duty changes: “With property investors frontloading their transactions into the first quarter of the year, activity was always likely to take a slight step back in the second quarter and so it transpired. Q3 is unlikely to see a marked uptick in values or transactions as we enter a traditionally slower season that sees individuals more preoccupied with holidays than houses, but is reassuring that the UK’s decision to leave the EU isn’t having the immediately negative impact that some doom-mongers predicted.
As well as representing good news for prospective purchasers, the rise in first-time buyer numbers has increased second-stepper activity in Prime Locations, which stands at 22%, up 9% from the beginning of the year.
Brown highlighted the impact of the Bank of England’s reduction in interest rates and the Brexit vote: “With the Bank of England reducing interest rates to a new historic low, mortgage finance will continue to be accessible, with pricing as attractive as it ever has been.
“We’re often surrounded by stories of what a raw deal first-time buyers get – particularly in the capital – so it was encouraging to see them dominate the market in the second quarter of the year. For all the hurdles that stand in the way of prospective purchasers there are plenty of other positive factors such as historically low interest rates to help soften the blow.
“The EU referendum result at the very end of the quarter came too late to impact the overall trends seen, but after the initial panic in the days immediately following, it’s been very much a case of business as usual ever since. Property investor activity is unlikely to remain so low in Q3 – especially with the currency exchange situation making London property extremely attractive for landlords from overseas.”
While the figures for first-time buyers in prime London locations look positive, investors are still prominent in Prime Central London, accounting for 31% of sales in Q2.
The annual picture was positive, with a 1.3% increase in average property prices in Prime London since the second quarter of 2015, rising to 2.7% in Outer Prime London.
This has been driven by particularly strong growth in certain south London areas, with Clapham (9.2%) and Balham (6.5%) leading the charge. North Kensington (5.1%) has also seen sustained annual price increases.