House prices in London are falling at the fastest rate in ten years, figures revealed today.
While property inflation has all but stalled across the UK, the capital has seen house prices fall 3.8 per cent over the past year, according to the Nationwide house price index.
The average home in London is now £18,000 cheaper than a year ago, at £455,594, figures show, but estate agents have reported a recent pick-up in the capital’s housing market as buyers take advantage of the dip.
House prices in London fell annually at the fastest pace since 2009 in March, according to Nationwide, but estate agents report a busy start to the year as buyers take advantage
Guy Gittins, managing director of estate agent Chestertons, said: ‘It was almost inevitable that the uncertainty of Brexit would drag property prices down, especially as the date gets closer and many buyers take a ‘wait-and-see approach’.
‘However, we have experienced an incredibly busy start to the year, with a sharp increase in buyer registrations, viewings and offers, which reflects pent-up demand and suggests that prices are now at a level that buyers are comfortable buying.’
Across the UK as a whole, house prices rose just 0.8 per cent in the year to March to reach an average of £213,102.
However, house price inflation nationally could soon follow London and fall into reverse as the current average price is almost £4,000 lower than the £217,010 peak reached last July.
In fact, Nationwide said that house prices are now falling in England overall, with a 0.7 per cent annual dip – the first since 2012.
This has been driven by declines in South East England, where the Outer Metropolitan area is down 2 per cent and the Outer South East area is down 1.1 per cent as London’s chill ripples outwards.
That stands in contrast to Northern Ireland, the North West, and the Midlands. Where prices are rising between 2.5 per cent and 3.3 per cent annually.
More volatile monthly figures showed the UK average house price up 0.2 per cent in March.
House prices across the UK have fallen back since last summer and the national average inflation figure could soon follow London and the South East into decline
Commenting on London and the South East’s slide, Robert Gardner, of Nationwide, said: ‘This trend is not entirely unexpected, however, as it follows several years of sustained outperformance which left affordability more stretched.
Nationwide’s map shows how house price declines (in red) are still confined to the southern part of the UK
Policy changes that have impacted the buy-to-let market in recent years are also likely to have exerted more of a drag in London, given that the private rental sector accounts for a larger proportion of the housing stock in the capital than elsewhere in the country.
‘More widely, prices across the South of England (and to a lesser extent in the Midlands) are also well above pre-financial crisis peaks, while those in Northern England, Wales and Scotland are still close to 2007 levels.
‘However, prices in Northern Ireland are still more than 35 per cent below the all-time highs recorded in 2007.’
A number of factors have been credited with triggering the slowdown in the property market, ranging from MPs’ bungling of Brexit sapping confidence, to home buyers struggling with high house prices and stretched affordability.
Despite that property transactions outside of London and the commuter belt have held up relatively well, supported by low mortgage rates, the return of wage growth, and high employment.
Mr Gardner said: ‘Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, even though survey data suggests that sentiment has softened.
‘Measures of consumer confidence weakened around the turn of the year and surveyors report that new buyer enquiries have continued to decline, falling to their lowest level since 2008 in February.
‘While the number of properties coming onto the market has also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers in recent months.’
Stuttering house prices combined with rising wages have slightly improved the house price to earnings affordability measure, but property remains almost as expensive as it has ever been
House prices in London and the South East are considerably above their pre-financial crisis peak, while in northern regions they are either marginally higher or still below that level and in Northern Ireland they are 37% down