‘Punishing’ drop in London house prices is fastest property decline since the recession, official data shows
- House prices in England grew by 1.2 per cent in the year to May
- London however saw a 4.4 per cent drop in prices, the biggest since the crash
- London price falls should slow in the coming months, experts predict
A dramatic drop in London house prices has ground to a halt across England as drags down the country’s average.
On average house prices across the country have grown by just 1.2 per cent in the past year, with the average property now valued at £229,431, according to figures released today from the Land Registry and Office for National Statistics.
London has seen the biggest fall in house prices since the recession: property values are down 4.4 per cent over the year to May, and a hefty 2.5 per cent lower than the preceding month.
This is the biggest slide in the capital since August 2009, when there was a 7 per cent fall.
House price changes in England in the month to May by region, according to the Land Registry / ONS.
Jonathan Hopper of buying agents Garrington Property Finders said ‘Such a punishing drop in London house prices is a reminder that the capital’s correction is still underway.
‘The scale of London’s fall – the largest seen since the recessionary plunge of almost a decade ago – is also a reminder of the definitive shift in the dynamic in the capital.
‘Buyers are now frequently able to secure additional discounts on properties that are already reduced.’
Annual house price change over the past five years, according to the ONS and Land Registry
But while the drop in London prices may look dramatic, the ONS report only provides data up to May and things have been improving of late, says one housing analyst.
Richard Donnell, research and insight director at Zoopla, said: ‘In late 2018 the proportion of local London markets experiencing annual price falls peaked at 80 per cent and has been steadily declining since this time, over the last three months just 28 per cent of markets registered price falls in London.
‘Average residential values in London are bottoming out for now and we predict sales volumes will slowly start to grow across late 2019 and market fluidity will gradually return.’
Sales volumes for the UK over the past five years, according to the ONS and Land Registry
Regionally the picture varies significantly. Across the UK as a whole house price growth remains slow, but areas in the North and Wales are seeing stronger growth.
The South West saw a monthly price rise to 1.2 per cent, while the North West saw the greatest annual growth, with prices rising 3.4 per cent over the year to May.
Former Rics chairman Jeremy Leaf said: ’What these figures highlight is the reverse North/South divide that we had previously grown accustomed to.
‘In other words, the more affordable areas of the North leading the way ahead of London and the South East where prices rose the furthest and the fastest in the past.’
Gareth Lewis of property lender MT Finance, said: ‘Looking at the regional differences, there is positive news for those less hit by the ability to purchase property or investors who are diversifying in terms of area.
‘So rather than looking to buy property in the south east, many people are now looking further afield – to the east Midlands, Wales and north west.
‘This makes for a more positive, balanced picture of the housing market, rather than a concentration of interest on London and the south east.
‘We are unlikely to see any significant change to property prices unless the new prime minister makes a significant change to stamp duty which is a big blocker to those buying second homes or buy-to-lets.’
How do the other indices compare?
Earlier this month Nationwide’s House Price Index returned similar findings.
Nationwide found that house prices rose by just 0.5 per cent over the past year, as the buyer’s market in London and the South East dragged the national average down.
The building society’s report, which includes more recent data but is less comprehensive than the ONS’s, found house price growth remained below 1 per cent annually for the seventh month in a row in June.
It also said the average house price edged up 0.1 per cent between May and June.
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