London’s property market appears to be cooling down with research revealing that up to 40pc of houses for sale in some areas of the capital have had to cut their asking prices since coming to market.
Earl’s Court, in west London, and Surbiton, to the south-west, had the highest proportion of price cuts in the capital, with 40pc and 38pc of properties for sale in the respective regions reduced in value.
The price cuts are largely concentrated in the high end of the market, in the centre, west and south-west of the city.
One-third of properties currently for sale in the borough of Kensington and Chelsea have had to cut their asking prices by an average 8pc, according to property analysis firm Propcision.
Adam Challis, head of residential research at JLL, said: “The demand doesn’t fuel a sense of urgency so you need to adjust expectations on price to get an agreed sale.”
He added: “What we’re seeing are moves in the market to get in line with expectations, but to create a soft landing or a stabilisation or plateau, rather than a fall.”
Other areas which have suffered considerable prices cut include Kingston-upon-Thames, Fulham, Wandsworth, Westminster, Hammersmith and Knightsbridge.
Propcision has tracked all properties that are currently available for sale to the public, including new-build homes.
Michelle Ricci, co-founder of Propcision, said: “The upward trend prime central London enjoyed for the past few years has started to show signs of resistance. This is typically associated with the start of correction, although not necessarily a downward trend.”
Areas to the east such as Tower Hamlets, Barking and Dagenham and Bexley, which have all seen sharp price rises and high demand recently, have much lower proportions of properties for sale at reduced prices.
Mr Challis said: “The data corroborates our own views on new build space – in east and south-east London, where there are lower value properties, there’s a lot of momentum and they will continue to see pretty decent price growth.
“We feel the data suggests asking prices are holding steady with levels seen in the past six months,” Ms Ricci added. “That said, there are particular areas of vulnerability that may start to show demonstrable evidence of a downward trend - most notably new-builds.”
Propcision’s research does not include flats sold in bulk by developers to institutional investors, some of which have recently experienced price cuts of up to 20pc.
Mr Challis said: “Often these things are being portrayed as stiff discounts, but land values will have been set at least three years ago with new builds, and developers are doing very well, even with bulk discounts of 15pc.
“Even in a strong market, you would see bulk deal discounts. This activity of larger institutional investors is affirmation of demand from investors for London stock, albeit at a diminished price.
“But there’s a lot of demand out there, and I can take a lot of reassurance from that. There are investors looking to buy, but they are not willing to pay a full rack rate.”
Earlier this week it was revealed that hedge funds had taken short positions against Capital & Counties, the developer of Earl’s Court. Boston-based Wellington, one of the world’s biggest asset managers, now has a 1pc short position against it. Capco said in February that sales of the second phase of its Lillie Square flats had ground to a halt.