James Pendleton has warned that sales of flats across London have collapsed by 47% in only a year.
The estate agent claimed that the London market has been overvalued for at least three years and buyers are reluctantly waiting for prices to drop to a more realistic level.
James Pendleton viewed flats as the backbone of the first-time buyer market and dramatic fluctuations in buying activity and sentiment could have consequences for the market as a whole.
The number of flats sold in July 2016 was 4,709, but by July 2017 this had dropped to 2,494, according to the latest figures.
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The number of detached properties sold fell by 5% in 12 months to 143 in July this year, semi-detached sales were down 1% to 516 and sales of terraced houses declined by 8% to 1,476.
Over the same period, sale prices of flats crept up 2%, terraced houses rose 3%, semis increased by 13%, while detached houses fell by 5%.
In the previous month – June 2017 – sales of flats were down 43% on June 2016, potentially pointing to a market that is prone to a well-overdue correction in prices.
“This is a classic sign that first-time buyer demand is sensitive,” said Lucy Pendleton, founder director of James Pendleton.
“There is a temptation to wait on the sidelines while prices become more realistic.
“When that happens, it can only be a good thing, because housing markets are most stable when transactions are healthy across the board.”