The death of the £100,000 property in London is now official, with research revealing that there are now no properties for sale in the capital for £100,000 or less and only four properties at £125,000 or below.
The findings, from online estate agents Housesimple.com, show that the cheapest property currently on the market in the capital (excluding shared ownership and auction properties, houseboats and retirement homes) is a studio flat in Hornchurch – which is seeking offers of more than £100,000.
Meanwhile, only four properties on the market in London would currently be exempt from paying stamp duty, with the tax kicking in on properties with a purchase price above £125,000.
The standard 0% stamp duty band covers properties with a purchase price of £0 up to £125,000, but a move at last year’s Budget by the Chancellor Philip Hammond means first-time buyers are now exempt from paying any stamp duty on properties up to £300,000.
While recent data suggests that property prices in London have noticeably cooled of late, with many sellers now lowering their asking prices to attract buyers, there still remains an affordability issue in the capital, especially for those on average UK wages.
Someone earning the average UK salary of £27,271, for instance, who has secured a mortgage of three times their salary, would still need a deposit of close to £20,000 to be able to afford the above property in Hornchurch. That, of course, also assumes the seller would accept an offer of £100,000.
After Hornchurch, the next cheapest properties can be found in Erith (a studio flat looking for offers in excess of £105,000) and Borough Hill in Croydon (asking price of £120,000). A one-bed flat in Sewardstone, Waltham Forest is on the market for £125,000, while a studio flat in Orpington is currently on sale for offers over £130,000. Even then, two of these properties – the studio flat in Borough Hill and the one-bed flat in Sewardstone – are only after cash buyers.
“The death of the £100,000 property in London was inevitable, but with just four properties on the market at under £125,000, this will very soon be the new price floor for the capital’s property market,” Sam Mitchell, chief executive of Housesimple.com, said.
“This research highlights the need for properties at the lower end of the market. Shared Ownership and Help to Buy have helped people on average incomes get a foot on the ladder, but both schemes have their critics. It can be complicated to sell a property if you only have a small stake in it, and expensive to increase your stake, as there are additional costs to consider. While Help to Buy has been criticised for actually pushing up house prices and providing a vehicle for developers to inflate new build values.”
He added: “London prices cooling will help buyers, but we should be careful wishing for a Brexit slump, because even a 10-20% drop in prices could push thousands of people into negative equity and unable to move. That wouldn’t be a good outcome for anyone.”