The research, undertaken by housebuilder Barratt London, surveyed 2,000 first-time buyers who were looking to buy in London during the next five years.
They were asked to guess the prices of properties in 12 London boroughs by only having the description of the property in front of them, along with the location.
In Westminster, 79% of people overvalued the cost of a first floor, two-bedroom apartment in Marylebone, valued at £849,995. Respondents estimated that the property was on the market for an average of £955,266, 12% more than the listed price. In Brent, 66% misjudged the value of the cost of a new build open plan apartment with two bedrooms in Stonebridge, estimating it would cost an average of £418,496, when in fact the property was listed at £379,950, miscalculating by 10%.
A spokesperson from Barratt London said: “We carried out this research to find out how first-time buyers perceive the cost of homes across London.
A huge number of respondents clearly think that house prices in London are higher than they are which comes as no surprise in today’s property climate. The research also revealed that first-time buyers in London are anticipating higher property values overall, location dependant or not.”
Sixty-seven percent of people overvalued the price of a £750,000 split-level maisonette in Camden, valuing the property at an average of £780,821 – more than £20,000 above the asking price. Interestingly, those who lived in the area estimated the property would cost more, valuing it on average at £814,114.
In Hammersmith & Fulham, a two-bedroom ground floor flat, listed at £799,950, was overestimated by 61% of respondents at £825,456 - 5% higher than the asking price. What’s more, those who lived in area thought the property would be on the market even higher, at an average of just over £835,000.
In Lewisham, 52% of people overestimated the value of a £425,000 two-bedroom, Victorian top floor split level flat, speculating the property would cost an average of £433,983 to buy. Those who lived in the area under-estimated the cost by 4%, valuing the property at £407,861. Lewisham was the only area in study where locals underestimated the price.
A Barratt London spokesperson continued: “As homebuilders, we aim to offer all house buyers, as well as first-time buyers, the best possible advice on what to expect when buying a new home. We work to make it more affordable for those looking to get on the property ladder, and those who are already on it to help them take the next step when it comes to buying their next property through several different schemes tailored to individual buyers.”
