The supply of smaller properties on the central London market has been boosted by people selling their second homes, a property consultant has said.
Owners of pieds á terre – apartments, often in the city centre away from a worker’s main residence – are looking to sell up and monetise their assets, meaning there is more studio and one-bedroom properties on the market, the property consultants, Cluttons has found.
The sale of these properties can create a financial cushion for their owners, who may have lost their jobs and be pleasantly surprised by what the apartments can fetch, the group said.
The money raised from the sale of the pied á terre could also be used to boost their budget for upgrading their main residence.
Other owners of these properties in prime buy-to-let locations are reinvesting the money in areas they believe have greater growth potential. Owners of properties in Shad Thames and Maida Vale may look to sell in favour of buying apartments in Kensal Rise or Wapping, Cluttons suggested.
The property consultant’s partner for residential sales James Hyman said: “There are a number of factors driving an increase in supply at the lower end of the market, which will help unlock stagnation further up the ladder.
“The exceptional demand for smaller, more affordable properties in recent months, as buyers are increasingly priced out of the market for larger homes, has resulted in remarkable price growth.
“This is tempting owners to raid their piggy bank homes and monetise their assets, using the cash to secure their personal finances, help upgrade their main residence or reinvest in a higher yielding buy to let property.”
First-time buyers have been held back by the overall lack of supply to the market in recent months, with a particular shortage of smaller and less expensive properties.
But central London’s first-time buyer market has been boosted by an increase in second home sales, helping to meet the high demand for properties at the lower end of the spectrum, Cluttons said.
Helen Adams, managing director of FirstRungNow.com, said: “In theory it all helps first-time buyers because there is a shortage of affordable properties in London.
“The stamp duty holiday ending didn’t make a big difference because the average price in London is above the threshold. It’s still extremely tough for first-time buyers in London, but one light on the horizon could be the NewBuy scheme.
“Many people in London are getting help from parents to get on the ladder.”