London house prices ‘overvalued by up to 50%’

London’s property market is “overvalued” by as much as 50% and this has raised fears of a “looming correction”, The Telegraph reported. 

S&P Global Ratings, an American credit rating agency, told the paper that “a combination of low rates, the stamp duty holiday and excess savings amid the pandemic have driven property prices higher, particularly in London and the South East”. Researcher Alastair Bigley warned that prices were likely to fall. “We expect a greater correction in property prices in an overvalued market,” he said. Meanwhile, outside London, S&P estimated that property was overvalued by 20%.

According to the latest house price index issued by property website Rightmove, the average home in London now costs £664,400. And the average time it takes to sell a home in the capital dropped from 68 days to 57 days in February – “another sign activity is picking up”, said the London Evening Standard. 

Rightmove’s data also revealed that the UK house price average is now £354,564 – the first time it has exceeded £350,000. 

Property prices fell by 1.8% in January 

The average property value in London was £510,102 in January 2022 – down 1.8% from December 2021, according to official data published by the HM Land Registry and the Office for National Statistics (ONS).

Regional data from the house price index revealed that London saw the lowest annual price growth, an increase of 2.2%, and the 1.8% dip was the most significant monthly price fall.

ONS figures also showed that the borough of Kensington and Chelsea “remains the least affordable place to buy a home, with properties typically costing 36.5 times earnings”, The Independent reported. 

Average price by property type for London 

Source: Gov.UK