London house prices

London house prices drop 2.9% in 2019

Aug 15, 2019

The capital’s poor performance belies strong growth in Wales, Northern Ireland and the Midlands

Peter Macdiarmid/Getty Images

House prices have dropped in the south of England in 2019, with London performing uniquely poorly, figures from the Office of National Statistics’ (ONS) price index revealed yesterday.

Among the index’s key findings was the report that in London, prices have sunk 2.9% in the year to June. “Average house prices in London have now been falling over the year each month since March 2018,” says the report.

Despite the South’s low growth rate, the UK as a whole saw an increase in property prices of 0.9%. Nationally, the average price of a house was £230,000 - £2,000 higher than the same month last year. 

This relatively flat overall performance is the result of large regional differences, with Wales, for example, contrasting London by experiencing a 4.4% hike in property prices.

The BBC reports that in Northern Ireland, house prices “between April and June were 3.5% higher than the same time last year.”

Other areas of growth include the East Midlands, which saw a growth rate of 3.2%, while the West Midlands saw growth of 2.6%.

According to the Guardian, the news marks “the first time that average prices had fallen in all three regions of southern England, covering an area extending from Milton Keynes in the north to Lands End in the west and Dover in the east, since September 2009.”

The paper asked Nick Leeming, the chairman of estate agent Jackson-Stops, if he could pinpoint a cause: “Data makes it clear that continued uncertainty as we creep ever closer to leaving the EU without a deal has caused hesitancy in some areas of the property markets,” Leeming said.

The Financial Times quotes Dilpreet Bhagrath, mortgage expert with online mortgage broker Trussle, who agrees on the source of the issue: “With house prices unchanged from May 2019, the property market still remains stagnant, and with a no-deal Brexit looming, this suggests that would be house-buyers are wary of committing to make the move.”

“With Brexit due to occur on 31 October - and it is currently very unclear what will happen then – we believe that uncertainty will weigh down on the economy over the next few months at least and hamper the housing market,” said Howard Archer, chief economic adviser at the EY Item Club, quoted by the Independent

“Consumers may well be particularly cautious about committing to buying a house, especially as house prices are expensive relative to incomes. Additionally, it looks questionable whether the labour market and earnings growth will sustain their recent strength over the coming months as companies are faced by a soft economy, domestic political and Brexit uncertainties and a challenging global environment. Consequently, we suspect house prices will rise by no more than 1.5 per cent over 2019,” Mr Archer said.

London house prices suffer sharpest fall in decade

1 August

House prices in London have experienced their sharpest fall in a decade as the capital’s property market continues its course correction after two decades of uninterrupted growth.

Figures from the Office for National Statistics showed that property values in London fell by 4.4% in the year to May, their biggest decline since a 7% drop in the year to August 2009, amid a dearth of potential buyers. “The capital bears the brunt of the nationwide torpor in the property market,” says The Guardian.

“London saw a surge in house price growth after the financial crash that saw prices almost double before cracks began to appear in late 2016,” says Sky News. It cites “a consequence of concerns about affordability after the boom and shaky sentiment since the Brexit vote”.

The Times agrees that the capital’s property market “has struggled since the Brexit referendum in June 2016, when house prices were rising by about 8.2%”. The newspaper adds that “buyers have since been waiting for political certainty and sellers have been reluctant to enter a slowing market”.

With the government promising to take the UK out of the EU with or without a deal by 31 October, Robert Gardner, Nationwide’s chief economist, warned of “mixed signals” from the UK housing market, saying it is caught between Brexit uncertainty and favourable economic conditions.

“In the near term, healthy labour market conditions and low borrowing costs will provide underlying support, though uncertainty is likely to continue to exert a drag on sentiment and activity,” he said.

The Brexit deadlock was blamed for wiping £20,000 off the value of an average London property in a year, but another factor is the growing number of older homeowners staying put in larger homes and therefore preventing younger buyers from moving up the ladder.

Experts at Nationwide said more than half of homeowners are now living in “under occupied” properties with at least two spare bedrooms. Among the over-65s, more than two-thirds of homes have at least two spare bedrooms, a marked increase over the past two decades.

“The shortage of sales of larger family homes by ‘downsizers’ could be a major factor preventing the formation of housing ‘chains’ that allow younger buyers to move out of small starter flats,” says Homes and Property.

While most property experts predict the market will remain in limbo until at least 31 October, “others are waiting for much-anticipated measures to slash stamp duty under Prime Minister Boris Johnson”, City A.M. reports.

Former Rics residential chairman, Jeremy Leaf, said: “One of the reasons for the lack of activity is clearly political uncertainty but there is no doubt that talk of changes to stamp duty is also weighing on perspective sellers’ minds.” 

What stamp duty cut would mean for London house prices

11 July

Plans by Boris Johnson to reverse the stamp duty hikes introduced five years ago could revive prime property prices in London and end the capital’s two-year market slump, new analysis has revealed.

Changes made by then-chancellor George Osborne in 2014 at the height of London’s housing bubble increased stamp duty on homes selling for between £925,000 and £1.5m to 10% and 12% for those over £1.5m.

Property Reporter says “the attack on high-end homeowners had the desired impact and with the far higher cost of stamp duty tax, transactions dropped and prices soon followed suit”.

Now Johnson, the front-runner to win the Tory party leadership, has vowed to roll these back and abandon all levies on properties valued at under £500,000.

Research into the effect of these changes by prime London property portal Vyomm has revealed that a reversal in the stamp duty hikes at the top end could help boost buyer demand and increase high-end house prices by as much as £700,000. This would help “the top end of the housing market to recover from the current slump which is attributed to the high level of tax and Brexit uncertainty”, says Property Wire.

Utsav Goenka, chief executive officer of Vyomm, said: “The market has adjusted and price growth has stabilised since these changes along with resulting price falls. However, there is currently an air of hesitation across all levels of the market due to the political landscape.

“A reversal of these stamp duty changes could provide the adrenaline shot that is needed to entice more buyers back to the prime and super prime markets and this will see prices increase notably when it happens.”

In terms of the lower end of the market, Buy Association website says: “Boris’s vow to scrap stamp duty on properties under £500,000 is an extremely bold promise, and it is difficult to say whether this could actually be achieved. However, it would move the goalposts significantly for those looking to get onto the property ladder, and even upsizers in many areas who would be able to afford a wider range of homes without having to fork out the extra stamp duty costs.”

Camilla Dell, managing partner at London buying agent Black Brick, agrees that “a move to cut stamp duty on homes below £500,000 would clearly benefit the first time buyer market”.

“In our opinion, this should only apply to first time buyers and not investors. However, the market needs to treat promises made by Boris Johnson, as he seeks election, with real caution,” she added.

It is hoped the potential changes would breathe some life into the capital’s flatlining property market. According to Nationwide’s latest house price index, the cost of buying continued to fall in London and the South East last month.

In the second quarter, prices in the capital fell 0.7% to an average of £465,722. South East house prices fared even worse, falling 1.6% to £277,227.

“Most of the slide in London prices has been felt by the owners of expensive properties in the capital, with multi-million-pound homes experiencing the worst falls,” says The Guardian. Prices are “likely to continue sliding as Brexit worries hit the capital’s housing market hardest”, adds the paper.

Yet despite the doom laden reports of a sustained property slump in London, Cain McKinnon, senior investment analyst at alternative finance platform Cogress, points out that the capital’s ailing housing market is still only 5% below 2017’s all-time highs.

Jonathan Hopper, managing director of Garrington Property Finders, compared London’s housing market to a supernova.

“After years of burning with stellar brightness, its slowdown is now exerting a gravitational force on the national average,” he told City A.M..

“That gravity has even turned the south east’s markets inside out. The outer London boroughs and the commuter belt [are] now suffering the sharpest price falls while central London values settle.”

Is the slump coming to an end?

18 June

House prices in many parts of London have been falling for some time as the overpriced market corrects itself, but new research suggests the long slump could finally be coming to an end.

The Daily Telegraph’s Marianna Hunt says “dampened demand, as buyers were put off by tax changes, high prices and poor value for money”, combined with uncertainty around Brexit has seen the number of sales in the capital fall by a quarter over the past five years.

Now new research by property website Zoopla suggests the slump in house price growth may be slowing. In October 2018 the level of house price falls plateaued and the number of areas in London registering a drop in prices has since fallen from 80% in October to 68% today.

House price growth is predicted to be flat this year before picking up in 2020. “As the cost of buying in the capital realigns with average salaries, experts predict that demand will bounce back,” says Hunt.

Separate research by Rightmove also points to tentative sings the collapse in London’s housing market is slowing.

In the year to June, asking prices across London fell by 2%, which is the smallest decline measured since January and an improvement on the 3.8% decrease recorded in March.

Homes & Property says “the slight upswing is thanks to higher numbers of first-time buyers taking advantage of low mortgage rates and the market slowdown”.

“The London housing market is coming to the end of what can be described as a three to four year repricing process, in which many areas have experienced small, single digit falls,” said Richard Donnell from Zoopla. “House prices grew rapidly between 2010 and 2016 and we’re currently seeing those prices fall back into line.”

Hunt says “house prices in London fell partly because of the nature of property cycles: values rise too high and then this is followed by a correction as local people struggle to afford the higher prices”.

Yet while market conditions currently favour first-time buyers, “there remains a gulf between wages and prices”, says Homes & Property.

Despite recent falls, the average asking price for a home in the capital still currently stands at £618,880, almost double the average of the rest of the country.

“Affordability is arguably the biggest drag on the market as, despite sluggish price growth as a result of Brexit, many still struggle to raise the capital required for a mortgage deposit,” says Marc von Grundherr, director of Benham and Reeves.

Research from Halifax has found key public sector workers, including nurses, teachers, paramedics, police officers and firefighters, can only afford to own a home in 8% of towns across Britain.

The mortgage provider looked at housing affordability for the five professions across 515 towns, including 31 London boroughs. It found only 40, or 8%, of these areas were affordable – down from 24% in 2014.

In some areas, a home typically costs more than 18 times a key worker’s average annual wage, with the least affordable areas for key workers unsurprisingly in London and the Southeast, “where house prices are significantly higher than the national average”, reports Metro.

City bucks downward trend

30 May

As average London house prices continue to fall, some select areas of the capital continue to buck the trend, with the City recording the biggest post-recession recovery out of any region in the UK over the past decade.

According to the latest Land Registry House Price Index figures, London house price growth experienced a 1.9% fall over the past year, with the average home costing £463,283 in March 2019, down from £472,357 12 months before.

“Once again, however, not all home owners are equally affected,” writes Paul Harper for Which? magazine.

The prime housing market in London’s central zones, which attract a high concentration of international investors, was hardest hit. In Kensington and Chelsea, prices dropped by a massive 16.4%, while prices in Westminster plummeted 14%.

“Brexit uncertainties and consumer worries about the economy have weighed on the market, compounding the problem of stretched affordability in London and the South,” writes Ian Stewart, Deloitte’s chief economist in the UK, on Reaction. “Higher rates of stamp duty on more expensive properties and weaker demand from foreign buyers have had their greatest effect on the London market. Meanwhile increased rates of stamp duty on additional homes, reduced tax reliefs and new regulations have dented the attractiveness of buy-to-let.”

Going against the trend, house prices in the City of London borough rocketed by 16.2% over the past year.

The Daily Express says new data has also highlighted that it is in the City where the biggest post-recession recovery has been made in terms of property prices.

A decade on from the financial crisis, price growth stands at 143.4% in the City of London. In June 2009, the average house price in this location stood at £348,751, while in February this year, the figure was £848,890.

This is compared to some areas of Northern Ireland where average prices are still at least 10% down on their pre-crash levels.

“That said, it’s worth bearing in mind that central London markets tend to record a small number of home sales at high prices, so the percentage increases and decreases can seem extreme,” says Harper at Which?.

While the continued drop in London house prices in general may not be ideal for current sellers, “this fall provides some hope for those looking to buy, especially for first-time buyers who are looking to step a foot on the property ladder”, Dilpreet Bhagrath, mortgage expert for online mortgage broker Trussle, told Money Observer.

Mark Harris, chief executive of mortgage broker SPF Private Clients, adds: “It could be argued that there was a need for a correction in the capital, with property prices racing away and putting ownership beyond the reach of many ‘ordinary’ people.

“Even with these price corrections, London is still the most expensive place to buy property. There remains a significant gap between incomes and property prices, although with lenders keen to lend and offering good rates at high loan to values, there is a glimmer of hope for those struggling to pull together the necessary deposit.”

Spring surge fails to boost market

21 May

The annual spring housing surge has done little to boost London’s flatlining property market, according to Rightmove.

The latest figures from the property website reveal house prices in the capital remain down year-on-year, driven by a slump in inner city sales.

Compared to 12 months ago, homes in outer London are 0.9% cheaper, whereas prices in inner London have fallen by 3.8%. Overall, homes in Greater London were worth 2.5% less than a year ago, meaning the average cost of a house was down £16,157 to £621,589.

New sellers in all but two boroughs are asking for less on average than a year ago. Only Barking and Dagenham in east London, and Bexley in the south east, have held their year-on-year value, “and they were the two cheapest boroughs last month”, says City A.M.

While this may spell trouble for existing homeowners, “house price trends can be good news for savvy landlords”, says The Daily Telegraph

“The reason is that London boroughs differ dramatically in terms of prices and rent expectations,” explains the newspaper.

“Traditionally the capital’s high prices have pushed landlords seeking higher yields to other parts of the country, such as university towns in the north of England. But new research has underlined how falling prices in London mean that rental yields are on the up.”

The continuing slump in the capital’s property market stands in stark contrast to other parts of the UK. According to Rightmove, house prices in Wales, the Midlands and North West of England have hit record highs despite “Brexit blues”.

Average asking prices in Wales have broken through the £200,000 barrier for the first time while the average cost of property in the West Midlands has risen 3% to £232,247 compared to last year. Average prices have also risen by 2.1% annually in the North West.

The Sun says the latest figures “back Rightmove's previous predictions that Brexit will actually boost the housing market by up to £3,500”.

Miles Shipside, director of Rightmove, said the increases seen outside of London are the “result of a combination of strong demand, buyers’ affordability headroom, and a continuing shortage of suitable properties”.

He added that Brexit was not really on the agenda of home movers in those areas.

This follows a wider trend that suggests uncertainty over Brexit appears to be subsiding.

“I’ve noticed an increase in viewings and offers over the last few weeks,” Jak Kypri, director of Harpers & Co Estate Agents in Bexley, told City A.M. “I think it’s because there is less talk about Brexit. Things have calmed down now; they all went away for Easter, the sun is shining, people are cutting the grass in their gardens, the country seems slightly less tense.”

Stagnation spreads to Southeast

7 May

The deepening property market slump in London has spread to the rest of England’s southeast which experienced its first annual fall in seven years, official figures from the Land Registry have revealed.

Nationwide prices increased 0.6% in the year to February 2019, while London saw a fall of 3.8%, faster than the 2.2% decline recorded in January “and the worst performance in a decade”, says The Independent.

It marks the 12th consecutive month where prices have fallen or flatlined in the capital. Prices are dropping in all but nine of London’s 33 local authority areas, “with some of the boroughs that were experiencing the most rapid growth last year now suffering the biggest reverses”, reports Homes and Property.

Hackney, Southwark and Harrow all recorded price drops of more than 6%, while Westminster took a massive 19.6% plunge, “although this is likely to have been exaggerated by fewer mansion sales”, says the property magazine.

Jonathan Hopper, managing director of buying agents Garrington Property Finders, said: “The sheer scale of the decline in London prices is breathtaking. In the space of a month, the annual rate of price falls in the capital has almost doubled”.

“Southeast England has also caught the capital’s cold, with prices in the commuter counties now falling on an annual basis for the first time in more than seven years,” he added.

Prices fell by 1.8% in the region in the year to February, offsetting stronger growth in other parts of the UK, most notably in the Northwest and the West Midlands which rose by 4% and 2.9% respectively.

The remarkable turnaround in what was once Britain’s boom market has been attributed to continued uncertainty around Brexit, fewer overseas buyers, tax changes and the stratospheric levels of prices before the downturn.

However, while London property prices are falling, the capital remains the most expensive place to buy with an average of £460,000.

Howard Archer, chief economic adviser at EY ITEM Club, said the figures “very much fuel the overall impression that the housing market is being hampered as buyer caution amid already challenging conditions is being reinforced by recent heightened Brexit and economic uncertainties”.

He added that “there are significant variations across regions with the overall picture being dragged down by the weakness in London and the Southeast”.

Archer predicted a 1% rise for the coming year but said he “would not be at all surprised” if prices continue to stagnate.

Investor hotspots hit hardest

1 April

London house price decline has been accelerating at its fastest rate in a decade since the start of the year, new figures have revealed.

According to a survey from leading lender Nationwide, the average price of a London home fell 3.8% to £455,594 in the three months to March compared with the same period in 2018.

“That was the biggest drop since the depth of the property market rout that followed the financial crisis in 2009 and wiped £18,182 off the average value”, says Homes and Property.

Uncertainty around Brexit has been the main driver of price stagnation although many experts believe an over-inflated market after nearly two-decades of uninterrupted growth has made a correction in the capital inevitable.

“Affordability, in our opinion, is very much the main reason why London has… hit this slowdown, but it has been exacerbated by uncertainty, mainly Brexit-related,” says Aneisha Beveridge, head of research at estate agent Hamptons International.

City A.M. says the “the market for high-end homes in London peaked about four years ago. But after almost a decade of growth, the subsequent downturn has spread to mid-market homes as well”.

“While the average price across the capital has fallen, some areas are more affected than others – and the worst hit areas tend to be investor hotspots,” says Which? magazine.

Analysing data from the Land Registry’s UK House Price Index, the consumer magazine found central London boroughs such as Westminster and Camden traditionally popular with foreign investors experienced the biggest fall in average prices in the year to January.

By contrast, the outer suburbs of Ealing and Newham saw substantial increases in their average price, of 4.95% and 4%, respectively.

“These areas tend to be more popular with families and first-time buyers, who may be unlikely to alter their plans based on Brexit,” says Which?

First-time buyers are the one group who appear largely undeterred by the current political uncertainty.

City A.M. cites research from Hamptons which “shows that this cohort was responsible around half of home purchases in London last year, many of them benefiting from the government’s Help to Buy scheme and stamp duty relief for buyers taking a first step onto the property ladder”.

London house prices fall at fastest rate in a decade

20 March

London house prices fell at their fastest rate for almost a decade in January, wiping more than £7,500 off the price of an average home in the capital.

Figures from the Office for National Statistics (ONS) revealed house prices in January rose by an annual 1.7% across the whole of United Kingdom, the smallest increase since June 2013.

However, the data varied widely nationwide, with the Midlands experiencing annual growth of 4.3%. By contrast London’s housing market fell 1.6% in the year to January, its biggest drop since September 2009, just after the low point of the global financial crisis.

According to the Land Registry the average price of a London home stood at £472,230 at the start of the year, down from £479,780 twelve months previously.

It also marks the 11th straight month where prices have not risen in London. Reuters reports that “prices in the capital were down 3.3% from their recent peak in June 2017, compared with an almost 18% peak-to-trough fall during the financial crisis”.

There were particularly heavy falls in Westminster, where prices slumped 14%, and in Camden where they were 8.3% lower.

Kevin Boa, real estate partner at Pinsent Masons, told City A.M.: “It’s no wonder that there is little buyer appetite whilst Brexit uncertainty persists, alongside the death of buy to let, increased stamp duty and the prospect of interest rate rises.”

Homes and Property predicted that “the Brexit uncertainty that has hung over the property market since the summer of 2016 would continue to depress prices if there is a delay to Britain’s departure from the European Union”.

However, Boa said that “regardless of what happens with Brexit, there remains a massive gulf between asking prices and buyers’ ability to afford mortgages, especially in the south east”.

“The bottom line is we are still not building enough homes to meet population forecasts, even if Brexit leads to a decline in net migration. Whatever happens with prices over the coming months and years, this chronic lack of housing is the biggest issue for the UK’s property market” he added.

ONS figures also showed the growth in London’s private rental prices rose by just 0.2% in the 12 months to February 2019, up from 0.1% in January 2019. This made the capital’s private rental growth the lowest in the country. Bad news for landlords, but good news for tenants in the city.

‘Wait-and-see’ approach replicated across UK

28 February

London’s once-buoyant housing market is facing a “prolonged downturn” as political uncertainty continues to impact consumer confidence, estate agents Foxtons has said.
The company, which has become a symbol of gentrification over the capital’s two-decade long property boom, reported losses of £17.2 million last year, compared to £6.5 million in 2017
The BBC reports the estate agent has been forced to close six offices in the past year, with its remaining 61 able to cover around 85% of London.
Beyond Brexit, rises in stamp duty have also seen more people choosing to stay put rather than move.
This “wait-and-see” approach has been replicated across the country. 
According to Nationwide's latest house price index, house price growth in the UK remained sluggish in February, with prices just 0.4% higher than the same time last year,
“While this is an improvement on the 0.1% growth in January, prices had been rising by around 2% last year” notes The Daily Telegraph.
Robert Gardner, Nationwide's chief economist, said the subdued activity in the housing market was due to weakened consumer confidence in the face of political and economic uncertainty as Britain prepares to leave the EU.
“While the number of properties coming onto the market 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” he said.
Jonathan Samuels, chief executive of property lender Octane Capital, was more downbeat, claiming that despite a strong employment rate, low borrowing rates and below-target inflation, buyer sentiment had been “shattered” and the property market was “on its knees”.
In the short-term, Lucy Pendleton, founder director of independent estate agents James Pendleton, warned City A.M. the current uncertainty clouding the market will be the norm until after the UK leaves the EU on 29 March.
Looking past Brexit, Pendleton said: “The market is falling in real terms but in the more expensive parts of the country, particularly London, it’s going to take a more significant retreat in prices to pull first-time buyers to the table in significantly greater numbers.”
Samuels suggests the impact of flatlining house prices could be indicative of a wider trend among house buyers.
“The home ownership rate may have improved but the relationship many people have with bricks and mortar is changing irreversibly” he said, warming “March could be the month the property market finally succumbs to madness.”

Foreign buyers tempted back by weak pound

20 February

Foreign buyers are being tempted back to the London housing market, as flatlining prices and a weaker pound make property in the capital too attractive to resist.

According to Rightmove’s latest house price report, the average asking price for a London home rose by 3.4% from January to February to £614,000.

Homes & Property says this was in part due to a seasonal uplift in new sellers “as people start to put their homes on the market as the spring selling season approaches”, but also an “influx of international buyers returning to the capital as the temptation of the weak pound overrides Brexit uncertainty”.

Hamptons International research found foreign investors bought 57% of homes in central London locations in the second half of 2018, and now account for a higher proportion of prime property buyers than they have in the past six years.

Renewed interest from abroad has driven the price bump in inner London boroughs such as Camden and Westminster, where asking prices rose more than 5% in February.

“The shift away from UK purchases continues the trend of rising demand from foreign buyers since the 2016 EU referendum, before which international customers bought only 40% of homes,” says City A.M.

Aneisha Beveridge, head of research at Hamptons, said: “Sterling’s weakness, making it cheaper for many international buyers, seems to be outweighing Brexit uncertainty when it comes to foreign buyers making a decision on where to buy a home.

“A property that would have cost an EU buyer £1m in the first half of 2016 effectively cost £124,000 less in the second half of 2018 due to sterling’s depreciation.”

A breakdown of Hamptons data has revealed that a growing proportion of these buyers came from Europe last year. EU buyers made up 19% of central London purchasers, regaining their position as the largest foreign group. By contrast, the proportion of Middle Eastern buyers in the area has nearly halved, falling from 15% in 2017 to 8% last year.

London house prices: is saving better than buying property?

30 January 2019

Investing in property in London may no longer be more profitable than putting money away in savings, new research has suggested.

“Buying property has been seen as an antidote to dismal returns on savings, but the best saving rates now look more attractive than property price growth in some regions in the last 12 months,” says Property Wire.

Using figures from the Land Registry and Moneyfacts, mutual insurer Royal London found that the best easy access savings account, paying 1.42%, is enough to beat house price changes in the slowest UK growth regions of London (-0.7%) and the south east (1.1%) in the 12 months to November 2018.

“Savings rates have been off-puttingly low over recent years, as a result of the rock bottom Bank of England base rate,” says Becky O’Connor, personal finance specialist for Royal London.

“However they have risen slightly as the base rate has increased [which] coupled with a decline in the rate of house price growth, has resulted in the most competitive savings accounts now paying more interest annually than property owners typically earned in the last 12 months.”

It comes as Foxton’s revealed its annual profits had collapsed 80% in 2018, following its “toughest ever” year in London.

“Famed for its fleet of green Minis and lounge-style, glass-fronted branches”, the estate agent “has become a symbol of a wave of gentrification and rising prices in London”, says Ben Chapman in The Independent.

But it has been hit particularly hard by property price stagnation in London. Transactions in the capital fell last year from their already historic lows, with “super-prime” central areas such as Kensington and Chelsea the most acutely affected.

“Ultra-rich foreign buyers have been put off by Brexit, higher property taxes and tougher controls around money laundering,” writes Chapman, while “buy-to-let investors have also faced higher tax payments and lower tax relief on mortgage interest payments”.

“This has made the returns for investors less worthwhile,” says iNews.

Foxtons, which has around 60 branches mostly in the south east, said it expects 2019 to remain “challenging”, even if its profits have been boosted slightly by a rise in revenue from rentals.

Sales facing worst outlook for 20 years

18 January

London property prices have fallen for the fifth month in a row, wiping more than £15,600 off the value of the average home since the market peaked 18 months ago.

Prices topped out in the capital in July 2017 and have been slowly declining since, “but without yet showing any sign of a full-scale collapse”, says Homes and Property.

However, some experts predict this week’s Commons defeat for Theresa May’s Brexit deal “may usher in a period of heavier falls”, the property website says.

Lucy Pendleton, director of agents James Pendleton, said: “London is feeling the strain as affordability continues to eclipse lack of supply. This latest episode of the Brexit horror show could easily be the straw that breaks its back and increase the capital’s rate of descent.”

While currency markets have judged the chance of a disorderly no-deal Brexit to have diminished following Tuesday’s Commons vote, property experts are less certain.

In the event the UK crashes out of the EU without a deal on 29 March, “London, with its exposure to international business, is in the line of fire”, says Mark Dyason, managing director of specialist lenders Thistle Finance.

He adds: “London has been managing to stay within reach of break even but that could now change.”

Continued uncertainty around Brexit has led to the most negative outlook for house sales in the capital in 20 years, according to a report from the Royal Institution of Chartered Surveyors (RICS).

Some 41% of surveyors expect sales numbers to fall in London over the next three months rather than rise, “the most pessimistic reading since RICS began its housing outlook surveys in 1999”, says Sky News.

Many surveyors are finding that homeowners are opting to stay put until there is more clarity on the nature of the UK’s exit from the EU. Others also cited changes to stamp duty and lack of housing supply for declining activity on the market.

The slump in the London market since mid-2016, which was highlighted in the Bank of England’s November inflation report, “is likely due to the area being disproportionately affected by tax and regulatory changes, as well as by lower net migration from the EU”, says This is Money.

Richard Snook, senior economist at PwC, said: “London is one of the most internationally dependent parts of the UK, due to economic integration with Europe and the high share of foreign citizens in the labour market; therefore we predicted in our July 2018 market projections that London house prices would underperform any other region.”

By contrast, analysis from property website Rightmove suggests rents will rise by 4% in London this year, outpacing the 3% increase predicted outside the capital.

Are London house prices heading for 1990s-style crash?

7 January

London house prices fell for the second consecutive year in 2018, raising fears the capital’s housing market could be heading for a 1990s-style crash that could take years to correct.

According to the latest figures from the UK’s largest mortgage lender Nationwide, prices in London fell by 0.8% in the 12 months to December.

It follows a drop of 0.5% in 2017, “making it the first time prices have dropped in the capital for two years running since the early Nineties property crash when they did not recover for a decade”, says Homes and Property.

Worst affected was London’s outer metropolitan commuter belt, which includes towns such as Guildford, Reading, Luton and Maidenhead, where prices dropped 1.4% in 2018, making it one of the worst performing areas in the entire country.

Across the UK as a whole, house prices grew by their smallest amount in almost six years, rising by only 0.5% to an average of £212,281.

“However, there were wide regional variations in house price growth in 2018,” says The Guardian.

Northern Ireland had the biggest house price rises, up 5.8%, while Wales saw prices climb 4% last year.

Uncertainty over Brexit appears to be the key driver undermining confidence in the market in the south-east, especially given that wage growth and employment remain strong.

Jonathan Samuels, chief executive of lender Octane Capital, said: “Brexit has smashed property market sentiment to smithereens. Buying and selling property requires confidence but confidence, as we edge closer to Brexit, is close to zero. For countless prospective buyers, Brexit has put everything on hold.

“Borrowing rates may be low and the jobs market strong, but a deep undercurrent of uncertainty is causing the vast majority of people to sit on their hands. It’s about as good a buyers’ market as it could get.”

Last week City bank UBS released figures showing that properties on the London housing market that had slashed their asking prices had risen to 39%, double the level three years ago.

There has been a surge in opportunistic, often cash, buyers snapping up properties at huge discounts, says Nicholas Finn, executive director of home buyers Garrington Property Finders.

“This is particularly true in London,” he says. “Sellers of homes who bought when the market was at its frothiest, or in areas without good transport links and schools, are often having to accept substantial reductions. Meanwhile thousands of would-be sellers are instead hunkering down and waiting until things improve before putting their home on the market.”

What will happen to London house prices in 2019?

18 December 2018

London’s housing market is expected to experience a slight “pull-back” next year, as house prices across the UK stagnate, according to Britain’s surveyors and valuers.

The Royal Institution of Chartered Surveyors (Rics) predicts that the number of house sales will fall to around 1.15 million, a drop of 5% compared with 2018 and sharply below the 1.7 million that changed hands in 2006, the year before the financial crisis.

Prices are also expected to flatline nationally, as London and the south-east experience a slight drop and Northern Ireland, the north-west, Scotland and Wales maintain “solid momentum”.

The surveyors body said that, while Brexit uncertainty is a significant factor, the key issue was that the ceiling for affordability has been reached in much of the south.

“House prices are now a greater multiple of earnings than at any point since records began,” said Rics. “Such high house prices are shutting more and more people from accessing the market and forcing others to save longer for a deposit.

“Even for those who could in theory afford to buy, current prices may still be off-putting. Unfortunately, there is little reason to anticipate a material improvement in affordability next year either.”

However, Rics dismissed as “implausible” the Bank of England’s warning that a disorderly no-deal Brexit could see property prices crash by up to 30%.

The Guardian says “one reason why house prices are unlikely to crash is the continued paucity of supply and few forced sellers”.

“Sellers are thin on the ground, limiting choice for buyers and the likelihood of a price crash,” says the newspaper.

This is supported by new figures from housing website Rightmove, which reveal that asking prices in the capital fell £11,275 to an average of £602,996 last month.

While this 1.8% seasonal slip actually marks the smallest November to December decline for five years, “it's not a sign of an improving outlook but rather a dramatic reduction of properties available to buy”, says Homes and Property.

According to Rightmove, the number of homes being listed for sale has plummeted by 19% compared to this time last year, which has helped to fuel the comparatively low five-year drop in asking prices.

“Wannabe buyers are therefore left with slim pickings to choose from and vendors are holding back as their homes appear to get cheaper,” says Homes and Property.

Sellers in inner London and the capital’s most central boroughs seem most hesitant, with a 24% drop in new listings compared to a 16% decrease in outer London.

This is likely due to the fact that a large contingent of affluent homeowners in the capital’s most expensive enclaves do not need to move house and are waiting for a recovery in prices before selling.

Experts predict further dip in 2019

27 November

The days of London house price rises massively outpacing inflation are over, at least in the short-medium term, a new poll of property experts has found.

Industry analysts and economists surveyed by Reuters have predicted house prices in the capital will fall 1.7% this year and a further 0.3% in 2019, whether or not the UK secures a Brexit deal.

Property values in the capital, long a haven for foreign investors, more than tripled in the last 20 years, “but demand and turnover have crumbled since the June 2016 vote to leave the European Union and property taxes were raised”, says Property Wire.

Independent buying agent Henry Pryor said: “Things are starting to look a bit bleak. Uncertainty is about the only thing we can be certain about over the next two years.”

With just four months left until Brexit day, Theresa May faces opposition from lawmakers in all parties to her negotiated withdrawal agreement, fuelling fears the country may leave without a deal in place.

Asked if there would be a return to strong turnover and above-inflation house price growth in London and the south east if a Brexit deal was struck, 14 of the 17 Reuters survey respondents said no.

“Brexit uncertainty is not the only thing holding back prices, as sharp increases in stamp duty and land tax stifle transaction volumes,” notes City A.M.

These factors saw shares in housebuilders Persimmon, Taylor Wimpey and Berkeley Group fall between 6% and 7% earlier this month in their worst daily performance since the referendum.

Property firm Savills has also warned that a major downturn in the housing market could mean a reduction in the number of affordable homes by a quarter.

The analysis comes after official figures showed the number of new homes built for social rent has fallen by almost four-fifths in a decade, while more than one million families are stuck on waiting lists for council housing in England.

In London and southern England the affordable housing shortage is “particularly acute”, says The Guardian

An estimated 42,500 households need homes priced below market rates every year but over the last three years only an average of 5,600 were built a year, leaving an annual shortfall of 36,900.

However, Russell Quirk, chief executive of online estate agent Emoov, had a message of positivity for Londoners looking to sell in the next few years.

“London demand is starting to poke its head above the stamp duty-laden parapet again,” he told Reuters.

“History tells us that you can’t subdue London long term and therefore it's clear that the current downturn in the capital's volumes and values is temporary.”

Indeed, the poll found that London prices are predicted to rise by 1.5% in 2020.

Buyers eye up Christmas discounts

17 November

London homeowners hoping to sell their property before Christmas are slashing prices, offering a rare opportunity for buyers in the run-up to the festive season.

Data from property website Rightmove reveals house prices in the capital fell 1.7% this month, marking the largest November drop since 2012, with London’s stagnant housing market continuing to see a sharper decline than any other UK region.

While prices typically edge down ahead of the Christmas period, today’s data “signals a higher-than-usual drop as sellers lower their demands in a bid to lure in cautious buyers amid Brexit uncertainty and wage stagnation”, says City AM.

While it is normal to see a cooling of this level in December, this year it seems that sellers are trying to find a buyer sooner rather than later.

Rightmove’s price figures often differ significantly from the prices recorded in the Halifax and Nationwide indices as they capture asking prices rather than mortgage data.

The Guardian says this “suggests that the recent standoff between buyers and sellers – with sellers not willing to cut asking prices to find a buyer – may now be over”.

“Far from being a negative development, it seems that this more pragmatic approach is paying off with the numbers of sales agreed up nationally by one per cent compared to the same period a year ago, suggesting that strong buyer demand and motivated vendors are very much keeping the market moving in many areas,” says the Daily Express.

The data also shows that the last 12 months have been a game of two halves in the capital, with average asking prices in outer London holding steady while central London flounders.

House prices in inner London are down 2.5% year on year, while locations such as Bexley and Bromley in the south are up by 2.8% and 2.1% respectively.

Andrew Matin, managing director of Harrisons estate agents, believes the inner/outer divide is down to differing buyer motivations.

“Outer London generally has much more appeal for families, and purchasers will typically occupy the properties themselves,” he told Homes and Property. “People need somewhere to live regardless of influences on the market. Inner London, however, is more investment focused.”

This year has seen inactivity in the central market amid investors trying to dispose of their assets, increased tax liability and economic uncertainty, said Matin.

London house prices to suffer as north-south divide narrows

7 November

The house price divide between London and the rest of the UK will narrow by up to a fifth over the next five years, a report from estate agent Savills suggests.

In the North West property prices are predicted to go up by 21.6% over five years, with most of the rest of the country set for double digit growth, while London prices bear the brunt of Brexit angst.

The Midlands, driven by the increasing popularity of Birmingham; Yorkshire and Humberside; Scotland and Wales “all also have the capacity for mortgage borrowing to increase relative to incomes and so are expected to experience strong double-digit price growth” says Homes and Property.

By contrast, property prices in London and the South East are only expected to increase 4.5% and 9.3%, respectively.

MoneyWise says the traditional North-South divide “will be turned on its head” in the years ahead.

Overall, average house prices in the UK are expected to rise by 14.8% between 2019 and 2024, in line with rises in average income.

The narrowing of the north-south divide “reverses the trend of previous decades” says The Guardian, with London house prices rising by a whopping 72% over the past ten years, compared to just 1.9% in the North over the same period.

Savills says that while Brexit will continue to hit prices, particularly in London and its commuter belt, local market affordability is expected to affect price growth over the longer term.

Stricter mortgage lending rules introduced in the aftermath of the 2008 financial crisis will limit price increases but would also protect the market from a crash, it added.

Lucian Cook, Savills head of residential research, says: “Brexit angst is a major factor for market sentiment right now, particularly in London, but it’s the legacy of the global financial crisis – mortgage regulation in particular – combined with gradually rising interest rates that will really shape the market over the longer term.”

“The return to growth in London overall will take far longer than expected,” says The Guardian, “with buyers struggling to afford purchases and interest rate rises expected to occur earlier than previously assumed”.

However, London’s prime market, comprising its most expensive properties, is expected to see a stronger upswing in the years to 2023, with 12.4% price growth predicted for pricey central London properties.

Savills said this was because high-end buyers are more likely to be paying cash and so are unaffected by mortgage regulation.

In recent years these buyers have been put off by increased property taxation at the top of the market and, more recently, by Brexit uncertainty.

“Five-year forecasts must be treated with caution,” warns the BBC, “particularly in the housing market, owing to the variety of events that can affect the UK economy and the sector, down to a local level.

The past five years have seen relatively little activity in the housing market.

On Thursday, the Nationwide Building Society said that many homeowners were choosing to stay put, leading to relatively few properties being placed on the market.

How the Budget will affect London house prices

31 October

With house prices in London continuing their decline, the Chancellor sought to inject some much-needed optimism into the property market with this week’s Budget.

The growing uncertainty around Brexit, combined with a shortage of properties and a higher rate of stamp duty on second homes, have weighed heavily on buyers in the capital in recent months.

Philip Hammond used his latest Budget to abolish stamp duty for first-time buyers of shared-ownership homes priced up to £500,000.

The savings will also apply to those who bought a shared-ownership property within the last year.

The move “could encourage more first-time buyers to buy a home under shared ownership, helping keep prices stable across the sector,” says iNews.

But the London Evening Standard reports that Hammond left much of the current thresholds unchanged, leading to criticism from commentators looking towards the higher end of the market.

“In failing to address stamp duty for a fourth consecutive year, the Chancellor has missed another opportunity to inject much needed momentum into the market,” says Rory O’Neill, head of residential at estate agent Carter Jonas.

Additionally, Hammond revealed that the government’s flagship Help to Buy scheme, which offers a 40% government loan to those buying in London, will be extended for first time buyers until 2023.

The Chancellor also confirmed that overseas investors would see higher stamp duty charges, a plan first announced by Theresa May earlier this month.

Under the new rules, non-residents will likely face a 1% surcharge when buying homes in England and Northern Ireland.

The tax could dissuade foreign individuals and firms from buying property, particularly in the most expensive parts of London, iNews says. “This would reduce competition among buyers and lower prices.”

London house prices: is market slump here to stay?

31 October

London’s stagnating property prices could be here to stay, regardless of what happens with Brexit, as many buyers continue to be priced out of the capital.

The latest figures from property website Zoopla, shows the asking price for two in five (39.5%) properties in the capital were reduced in price last month - up from 34.6% in April.

Mitcham, in south west London, has seen 45% of asking prices reduced - the most of any London borough, while Kensington & Chelsea, home to some of the world’s most expensive residential property, registered the biggest drop in cash terms with an average discount of £127,394.

Combined with separate Office for National Statistics figures showing house price growth around the capital slowing to a six-and-a-half-year low, Zoopla’s research “is the latest to signal a decline in the UK housing market, particularly in London and the pricier parts of the southeast of England”, reports The Independent.

Many property experts agree the London housing market is in bad shape but could it possibly be worse than it looks on paper?

Official numbers show that prices in the capital only started to fall this year, “but it feels much more brutal to real-estate agents on the ground”, writes Anurag Kotoky for Bloomberg.

James Hyman, head of the residential agency division at Cluttons, says the market is already down by about 15% in central London compared to four years ago and may fall another 7% in the next 18 months.

“For Hyman and other realtors - not to mention home sellers - the list of market challenges has grown in recent years,” says Kotoky.

The slowdown, triggered by a slew of new taxes on second-home sales and stamp duty, has been compounded by Britain’s impending exit from the European Union, and the threat of a new levy on foreign buyers.

“Brexit was the absolute final reason why the property market in London would come to a slide down,” Hyman told Bloomberg. “This is about affordability.”

London remains the region with the highest average house price at £486,000, followed by the south east and the east of England, at £329,000 and £292,000 respectively.

According to the Institute of Fiscal Studies, only a third of young adults can afford to buy a house in London on a 10% deposit with a mortgage of 4.5 times their salary.

Kevin Roberts, director of the Legal & General Mortgage Club, told City AM: “Slower house price growth is certainly music to buyers’ ears, but challenges remain. Saving for a deposit is still the largest barrier to homeownership, with those in London having to save for up to 17 years if buying alone.

“Meanwhile, for those further up the ladder, the cost of stamp duty is discouraging some homeowners from moving - opting to ‘improve, not move’, instead.”

Stretched affordability means that, even if a Brexit resolution is reached, experts are predicting that London’s housing market is likely to remain subdued for some while yet.

Landlord exodus opens path for first-time buyers

15 October

An exodus of buy-to-let landlords in London is opening up a unique opportunity for first-time buyers, property website Rightmove has suggested.

House price movements in the capital are at their most subdued in eight years, with prices for one and two bedroom properties falling marginally over the past year.

This is the point where aspiring first-time buyers typically have competed with investors, but a 3% rise in stamp duty for buy-to-let and second home properties has put off many would-be landlords, clearing the way for new buyers, The Times reports.

Miles Shipside, a Rightmove housing market analyst, said: “Government policy has sought to reduce [buy-to-let investor] activity and so tilt the balance back towards first-time buyers.”

He added that “landlords are clearly buying far fewer properties and that leaves a gap in the market for first-time buyers”.

While landlords were hit with the 3% stamp duty surcharge from April 2016, first-time buyers were “effectively awarded stamp-duty-free status in November 2017”, said Shipside.

The fall in prices at the bottom of the market over the same period provides an opportunity for aspiring homeowners to “negotiate harder”, says Shipside.

The muted buy-to-let sector “is also dampening demand and stifling the usual autumnal hike in asking prices”, says Homes and Property.

The Rightmove Index has found the autumn selling season, which sees vendors launch properties that have been held back over the summer, has started with a whimper as asking prices in central London fell 1.1% to £625,000 this October compared to the same month last year.

Property analysts believe this slowdown is due to deepening political uncertainty in the build-up to the UK leaving the European Union next March and the gap between house prices and household incomes in the capital, with first-time buyers still struggling to save for a deposit.

North London estate agent and former Rics residential chairman Jeremy Leaf told Mortgage Strategy: “Buyers and sellers seem worried about the two ‘B’s – not only about the impact of a good, bad or indifferent Brexit deal but also the looming Budget at the end of the month.”

All eyes now turn to Philip Hammond, with the chancellor rumoured to be looking to encourage more landlords to sell to long-term tenants for a capital gains tax relief.

This could provide a win-win situation for both investors and first-time buyers, and further boost the number of one and two bedroom properties on the market.

First-time buyers priced out of even cheapest homes

8 August

Only a third of people with a 10% deposit can borrow enough to buy one of the cheapest homes in their area of London, despite prices in the capital falling for the fifth quarter in a row.

Nationwide’s House Price Index shows property prices in London fell by 0.7% in the year to September, driven down by a higher rate of stamp duty on second homes affecting buyer appetite, and international buyers deterred by uncertainty surrounding the Brexit negotiations.

But despite a recent drop in the London market, the capital remains the most expensive place to buy a property, with average prices more than twice the national average of £216,103.

James Newbery, investment manager at property investment platform British Pearl, says: “What’s striking is that we are still a nation divided. Growth since the financial crisis has been incredibly uneven with many regions still struggling to get back to where they began whereas London has powered ahead.”

Your Money says prices in London are only 3% below their 2017 peak and still more than 50% above their pre-credit crunch levels.

“London has become a weak spot in the UK property market,” says The Guardian, “with many homebuyers unable to afford a house after a run of strong price rises”.

The problem is most acute among young and first-time buyers, many of whom have been priced out of the capital completely.

The Institute for Fiscal Studies (IFS) says only a third of people with a 10% deposit could borrow enough to buy one of the cheapest homes in their area. The figure was 90% cent in 1996, claims the London Evening Standard.

Nor is this problem confined to London or the south east. The IFS estimates only 60% of young adults can afford to buy the UK's cheapest homes even if they save a 10% deposit. Again, the figure was 90% in 1996.

The think tank said the extent to which property prices have raced ahead of incomes has made it increasingly hard to raise a deposit for a home.

It found average house prices in England have risen 173% since 1997, while wages went up just 19%.

This has led to the proportion of 25 to 34 year olds who own their own home dropping from 55% to 35% between 1997 and 2017.

Polly Simpson, co-author of the research, said: “Many young adults cannot borrow enough to buy a cheap home in their area, let alone an average-priced one. These trends have increased inequality between older and younger generations, and within the younger generation too.”

The IFS argued that easing planning restrictions would increase home ownership and reduce property prices and rents.

The end of the £100,000 home?

24 September

Five-figure homes for sale in London appear to be a thing of the past, after new research revealed there are currently no properties on the market in the capital for less than £100,000.

The study from online estate agents Housesimple shows that, excluding shared ownership and auction properties, houseboats and retirement homes, the cheapest property on the market today in London is a studio flat in Havering which is asking for offers over £100,000.

With stamp duty rates kicking in on properties with a purchase price above £125,000, there are just four properties in London that are stamp duty exempt.

“The death of the £100,000 property in London was inevitable, but with just four properties on the market at under £125,000, this will very soon be the new price floor for the capital’s property market,” said Sam Mitchell, Housesimple chief executive officer.

The symbolic milestone comes despite new data showing London house prices are falling at their fastest rate for nine years, reports the London Evening Standard.

Office for National Statistics figures reveal the average value of a home in London stood at £484,926 in July, down 0.74% on a year previously, a drop of £2,500 in real terms.

Prices have not fallen more rapidly since September 2009 when they plummeted 3.25% while the market reeled from the impact of the financial crisis.

A separate one-off ONS analysis of the London property market concluded that its slowdown over the past two years may have been because the capital was “particularly affected by a fall in net EU migration and wider uncertainty following the Brexit referendum result”.

Higher rates of stamp duty on more expensive homes have also hit London harder than other UK areas.

As property prices have cooled in recent months many sellers have begun dropping their prices to attract buyers, “but there is still an affordability issue in London, particularly for people on average UK wages”, says Property Wire.

It means a person on the average UK salary of £27,271 who is able to secure a mortgage three times their annual earnings would still need a deposit of £20,000 in order to afford a £100,000 flat.

Mitchell said; “London prices cooling will help buyers, but we should be careful wishing for a Brexit slump, because even a 10 to 20% drop in prices could push thousands of people into negative equity and unable to move. That wouldn’t be a good outcome for anyone.”

Why home flippers are looking north

17 September

House flippers, people who buy and sell within 12 months in the hope of making a quick profit, appear to be deserting London and heading north.

Almost three quarters of the top 15 destinations for “flipping” homes in 2017 were in the north of England, while none were in London, according to an analysis of Land Registry data by Hamptons International.

At the top of the list was Burnley in Lancashire, England’s cheapest local authority where the average property costs £81,352.

In contrast, London’s most expensive borough, Kensington and Chelsea, which has been a top flipper destinations in previous years, dropped off the list.

“House price growth in London slowed almost to a standstill in 2017, and moved into negative territory this summer. But in the regions house prices are rising,” says the Financial Times.

Aneisha Beveridge, research analyst at Hamptons, suggests the new stamp duty surcharge of at least 3% on additional homes over £40,000 has prompted some speculators to head north.

The average stamp duty cost on a second home in Burnley is £2,440, compared to £99,750 for a second home in Kensington and Chelsea, where the average price of a home is £1.2m.

The total worth of homes sold at least twice in England and Wales in 2017 fell by £200m to £4.1bn.

“Levels of property speculation since the financial crisis have not equalled those of the early 2000s, when a 13% annual rate of house price growth resulted in more than £6bn of ‘flipping’ annually for six consecutive years,” says the newspaper.

Homeowners flee capital for north in record numbers

28 August

London homeowners are fleeing the capital for the north and Midlands in record numbers, lured by cheaper, bigger properties.

Research by estate agents Hamptons International found the proportion of Londoners selling up and moving north has trebled since 2010.

It comes as separate data from property market analysts Hometrack underlined the gulf in prices in the capital and the rest of the country, with average prices in hubs such as Belfast, Aberdeen and Liverpool well below where they were a decade ago, compared to London where they are more than 65% higher.

The Times says “a key issue behind the housing crisis in London and the southeast is the gap between prices and earnings”.

For the average first-time buyer, house prices in the capital are 13 times their wage, and in the southeast they are 11.8 times average earnings.

Combined with a soaring cost of living in the capital and recent changes to stamp duty hitting more expensive properties, many people already on the property ladder have decided to trade up and move out.

The average Londoner quitting the capital will have £424,610 to spend on a new house, enough to buy a large detached house in a good suburb of Birmingham, but only a two-bed flat above a shop in east London.

The average cost of stamp duty for a detached home in the south was £14,780 compared with £5,358 in the north.

Aneisha Beveridge, research analyst at Hamptons, said Londoners were increasingly picking areas in the north so they could jump several rungs up the housing ladder in one go.

Parents looking for a bigger home near to better schools were driving the exodus from the capital, said the agents.

The surge in Londoners moving to towns and cities within the city's commuter belt, such as Hastings and Bath, have been blamed for pushing up house values and pricing locals out of the market.

Yet while most Londoners who move away traditionally head to the home counties, the number moving further afield has skyrocketed since the financial crisis. In 2008 one in 17 headed to the north or Midlands, now that figure is one in five.

Cities such as Birmingham have therefore “become hot destinations for Londoners”, says The Times, with research from the estate agent Knight Frank revealing that a larger number of Londoners were heading to Birmingham than to any other city in Britain.

However, while the proportion heading north has increased three-fold in little under a decade, “the absolute number of London leavers will strike many as surprisingly low”, says The Guardian.

Just 30,280 Londoners sold their home in the first half of the year to move out of the capital, a rise of 16% over the same period last year, but still just a tiny fraction of the 8.8 million people who live in the city.

London house prices suffer ‘late summer sale’ drop

20 August

The asking price for newly listed houses in the UK tumbled 2.3% from July to August, as sellers launched a “late summer sale” to unload property faster over the holiday period.

Figures from Rightmove's housing index reveal London experienced the greatest average drop in asking prices across the country, down 3.1%.

While it's common for sellers to cut their asking prices over the summer, this year's August drop was the steepest since Rightmove started publishing data in 2001.

Rightmove said that the national average figures were weighed down by the “more subdued market in London and the commuter-belt region of the southeast”.

Business Times says the report “adds to signs that the British housing market is weakening after a three-decade boom, dragged down by stretched affordability, slower economic growth and the uncertainty created by Brexit”.

Rightmove director Miles Shipside branded it a “late summer sale”, adding: “With lacklustre average wage growth, more buyers are bumping up against the tighter lending criteria brought in four years ago, which were intended to prevent another boom-and-bust cycle.”

It comes as official figures released last week showed London prices falling by 0.7% in the year to June - their fastest rate since 2009, when the country was reeling from the global financial meltdown.

Three of London’s central boroughs had double-digit drops in prices as the reversal in the capital's fortunes continued. The City of London fell 23.8%, Kensington and Chelsea dropped 13.9% and the City of Westminster slid 12.1%, according to data from the Office for National Statistics and the Land Registry.

While the latest figures continue to paint a bleak picture for existing homeowners, there is some good news for first-time buyers in the capital as the cost of one or two-bedroom flats fell to the lowest level since July 2015.

Still, prices for first-time buyers in London remain more than 2.5 times the national average.

Despite sharp falls in some of its boroughs, London remained the most expensive region of the UK to buy a property in June, with the average home costing £477,000, more than twice the UK average of £228,000.

Central London house prices stage slight comeback

14 August

Central London house prices have bucked the recent downward market trend in the capital to stage something of a comeback in the second quarter of the year.

The LonRes Residential Review, which documents London house price movements, found prime central London property enjoyed modest price rises of 1.2%, compared to the second quarter of 2017.

However, London remains a “mixed picture,” says Acadata, with the overall number of sales in the second quarter falling by 7% from a year earlier and prices declining in almost two-thirds of the capital’s boroughs.

House prices in Greater London, which has outperformed prime central since 2015, fell 0.4% compare to last year, despite UK house prices growing by 3% during the same period.

Property prices in SE1, SE11, SW4, SW5, SW6, SW11, W4, W6, W9, W10 post codes, which LonRes labels ‘Prime Fringe’, were also impacted, down 5% during the second quarter of 2018, compared to the same period in 2017.

Despite picking up slightly in central areas, the reports noted “political uncertainty continues to put the brakes on transaction volumes”.

As well as concerns over Brexit, another factor hampering transactions is changes to stamp duty, “which appear to be holding people back” says Aaron Strutt, communications director at London-based adviser Trinity Financial.”

“When we speak to estate agents, they have been selling fewer properties in Central London due to the stamp duty changes” he told FT Adviser. “So, while we think the market is relatively buoyant from a mortgage point of view, some estate agents will likely give you a different opinion.”

Acadata said the Bank of England’s interest-rate increase in August is also expected “to result in a further reduction in housing market activity”, reports Bloomberg.

When will London house prices go back up?

6 August

House prices in London continue to decline, with the Bank of England’s interest rate rise likely to do more damage.

Average prices in the capital fell to £478,853 in May, down 0.4% over the year, according to the latest figures from the Land Registry.

The 0.25% rate rise, from 0.5% to 0.75%, is predicted to push prices down further.

“It’s not the relatively modest increase in interest rates which is significant – the message it sends about their future direction is far more important,” Jeremy Leaf, a London estate agent and former residential chairman of the Royal Institution of Chartered Surveyors, tells Homes & Property.

“The change is likely to compromise already fragile confidence to take on debt in the property market and wider economy.”

PwC predicts price falls in London of 1.7% in 2018 and 0.2% in 2019, partly due to uncertainty over Brexit and the likelihood of further interest rate rises.

Guy Myles, from financial advisers Flying Colours, points out that the ratio of average London house prices to the average salaries of workers is now “at an awe-inspiring 15x compared to as low as 5x in other cities in the UK”.

Writing in an advice column for iNews, he says he would be “very surprised if that is sustained” and suggests that buyers “hold off buying in London” and “press on in places like Liverpool and Birmingham”.

Analysis carried out by KPMG UK in March also suggested that London prices would grow the least in the UK. However, it noted that a shortage of housing stock in the capital “is expected to support growth in the medium-term”.

The professional services firm predicted 1.5% average annual growth to 2022.

London house prices: Foxtons' profits plummet but rental market remains strong

31 July 2018

Foxtons has reported a loss for the first half of the year, in a clear sign London’s property market has continued to stagnate.

The London-focused estate agent, a bellwether firm long-associated with gentrification and the capital’s decade-long property boom in the capital, recorded pre-tax losses of £2.5m in six months to June, compared with a £3.8m profit last year

The company said the property sales market in London was “undergoing a sustained period of very low activity”, and sales were taking longer to complete with transaction levels now well below historic averages.

Apart from continued uncertainty over Brexit, one of the major factors holding back sales has been changes to stamp study which have affected more expensive properties, second home owners and by-to-let.

Despite this, Foxtons' share price rose 6.5% in this morning’s trading, with investors reassured by the future outlook.

This was, in part, due to the continued resilience of the letting market, with Foxtons' revenues dropping just 1% in the first half of the year.

The company said that lettings continued to deliver a “consistent and stable revenue stream”, and was a market with good long-term fundamentals, particularly in London where more than one million households were now renting.

Foxtons chief executive Nic Budden said: “Looking ahead, availability of mortgage finance, absorption of stamp duty costs, and the return of confidence to the market will, amongst other factors, determine the timing and rate of increased activity levels.”

However, he insisted the fundamentals were still solid, saying London “remains an important global city”, and adding: “We remain confident of our long-term prospects.”

The recent course correction in London’s housing market has been welcomed by those looking to get on the housing market, even though the “affordability ratio” between how much first-time buyers need to earn to afford a property in London and how much they actually earn has jumped by 235% in less than two decades.

Figures from the Bank of England released on Monday showed a slight rise in the number of mortgages approved for house purchases in June compared with the previous month.

However, the BBC says “this is unlikely to affect thinking among policymakers at the Bank who meet this week to decide on the level of interest rates”. An anticipated rise from 0.5% to 0.75% is expected to push up the cost of borrowing for those on variable rate mortgages.

Are falling house prices a correction or crash?

23 July

London property prices have maintained their slow decline from all-time highs reached last summer, and are set to continue falling for at least the next 18 months, according to analysis from consultancy firm PwC.

The latest figures from the Land Registry show prices in the capital dropped by 0.4% to an average of £478,853 in the year to May, still well out of reach for most young Londoners.

Richard Snook, senior economist at PwC, gives three reasons why affordability in the capital has been stretched: “a high deposit saving hurdle, increased economic uncertainty relating to Brexit acting as a drag on international investment, and reduced numbers of housing transactions due to stamp duty changes”.

While falling prices will be welcome news for first-time buyers struggling to get on the housing ladder, Shaun Church, director at Private Finance, says “for those that already own a property, news of negative house price growth will be met with concern, as hopes of making a quick and easy profit from their properties will be dashed”.

However, he added that while “a decline in house prices is never a vote of confidence for the UK economy, this downward trend we are witnessing in London is a correction not a crash”.

With continuing uncertainty over the Brexit negotiations and further interest rate rises expected over the coming months, London prices are unlikely to resume their upward path soon, but “a full-scale collapse is seen as unlikely”, agrees Jonathan Prynn in the London Evening Standard.

PwC predicts London house price growth will pick up again in 2020.

Long the country’s fastest-growing market, price stagnation in the capital stands in stark contrast to other parts of the UK. While historically strong growth areas such as Manchester appear to be running out of steam, the East and West Midlands continue to jostle for position as the regions with the fastest-rising prices.

Jonathan Hopper, managing director at Garrington Property Finders, says: “The property market is increasingly resembling a magnet – with the opposing poles pulling in opposite directions.

“London’s negative gravitational pull has dragged the national growth rate down, but also obscured the rapid price appreciation being seen in many other regions.”

Glimmer of hope for first-time buyers

16 July

London house prices are continuing to slide, with the collapse in the buy-to-let sector increasing the number of homes on the market for first-time buyers.

According to new research from property portal Rightmove, one and two bedroom homes for those looking to get on the housing ladder have have fallen 3.5% to an average of £486,000 over the past year. This amounts to about £18,000 in real terms.

Meanwhile the price of three to four bedroom houses has remained relatively unchanged at just over £700,000.

The drop in starter-home prices has been driven predominantly by the collapse of the buy-to-let sector, which has been hit by changes to tax, making rental properties far less lucrative for their owners.

The number of homes available for first-time buyers has therefore increased, pushing down prices.

“Aspiring first-time buyers are among the greatest potential beneficiaries of the downwards adjustment in asking prices by London’s sellers over the last 12 months,” said Miles Shipside, Rightmove director and housing market analyst.

“It’s been well-documented that the top end of the London market has been struggling for the past couple of years, but... asking prices in the lowest priced sector are now experiencing a larger percentage fall than these high-end properties.”

Homes and Property says that combined with Stamp Duty relief on properties worth less than £500,000 and government initiatives such as Help to Buy London, “the news will bring relief to the 47% of millennials who recently told Royal Bank of Scotland researchers they had given up hope of ever owning a home”.

According to Rightmove data, prices slipped 0.5% across the capital as a whole in June, with UK prices in general falling for the first time in seven months as sellers adapted to the reality of the weaker market.

The British housing market is weakening after a three-decade boom amid slower economic growth and the uncertainty created by Brexit, says Bloomberg, with London, where the average house price is more than double the national average, hit harder than the rest of the country.

Prime property market continues to fall

10 July

Property prices in London’s prime locations continue to fall amid growing calls for the Bank of England to freeze house prices across the UK.

Data from international real estate firm Knight Frank revealed central London prime prices are down by 1.8% in the 12 months to May 2018.

According to Tom Bill, head of London residential research at Knight Frank, the current period of price declines in prime central London has lasted for almost the same length of time as that recorded in the early 1990s, before the capital's decades-long property boom began.

However, “the current peak to trough decrease of 9% is considerably lower than then”, says Property Wire.

Last month, property portal Rightmove found the number of £1m homes on sale in London has risen to a record high as buyers walk away from “vanity” asking prices.

Nevertheless, exorbitant prices in London combined with surging property prices in other parts of the UK has led one respected think tank to suggest the Bank of England use its powers to freeze house prices to reduce the chances of another financial crisis.

The centre-left Institute for Public Policy Research (IPPR) says Britain needed to “reset” the way it thinks about rising prices to break the “cycle of ever-rising house prices that drives property speculation”, which it argues crowds out investment in the “real economy”.

The problem remains most acute in London, where house prices are 14 times higher than average earnings.

To combat this, the IPPR says the Bank of England should be given the right to set a target for house price inflation, as it does with consumer prices inflation, and effectively quell house price growth for the next five years through mortgage restrictions, allowing time for average wages to catch up. It said the Bank should insist on higher deposits and stricter loan-to-income ratios.

The Times says the new target “could encourage homeowners to stop borrowing more against the rising value of their homes, which risks fuelling a new debt bubble, while at the same time making homes more affordable for those on lower incomes”.

High house prices leads to record exodus from London

3 July

High house prices in London have led to a record exodus away from the capital as younger people, especially, move in search of more affordable living elsewhere.

Analysis of data from the Office for National Statistics by Knight Frank revealed more than 330,000 people made the move out of the capital during the year to June 2017. With fewer than 230,000 people moving in the other direction over the same period, it meant London had net outward migration of 106,000, up 14% annually and 55% higher than 2012.

It marks a dramatic turnaround for London, which until 2016 was the fastest-growing region in England. It has seen its growth rate halve in the past year, “driven by people in their 30s and early 40s with young children deciding to pack up and leave”, says The Guardian.

It follows a recent report by the Resolution Foundation think tank which said London’s expensive property prices were leading to an exodus of people in their early 30s.

Tom Bill, head of London residential research at Knight Frank, said: “While this highlights a potential longer-term risk, housing affordability is likely to have helped sway the decision of some to leave London.”

The estate agent added that “as well as a desire to trade up the housing ladder in search of more space, increased employment opportunities outside London means people are becoming more confident to make the move from the capital”.

The most popular destination for leavers was Scotland, followed by Birmingham, Brighton and Hove, and Bristol.

The only age group that had a positive net migration figure in the capital, according to the statistics, were those in their twenties, which has been attributed to the large number of students moving to London to study.

London house prices fall as UK growth hits five-year low

28 June

Annual house price growth in Britain has fallen to a five-year low, according to figures from Nationwide - and London is the weakest-performing region.

Although the capital “is still easily the most expensive place to buy property, the average price of a home in London fell by 1.9% in the second quarter to £468,845,” The Guardian reports. Across the UK as a whole, annual growth was 2% in June, down from 2.4% in May.

The mortgage lender says a number of factors are to blame for poor growth, including “subdued economic activity” and squeezed household budgets, which are keeping a lid on demand.

Robert Gardner, Nationwide's chief economist, says there are few signs of an imminent change and expects house price growth for 2018 as a whole to slow to around 1%.

“Surveyors continue to report subdued levels of new buyer enquiries, while the supply of properties on the market remains more of a trickle than a torrent,” he told City AM.

Looking further ahead, “much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates,” Gardner added.

Most economists expect the Bank of England to raise interest rates by a quarter of a percentage point to 0.75% in August, only the second increase since the global financial crisis, Reuters reports.

“The pace of increase after that is expected to be gradual, as the BoE assesses the effect of Britain's departure from the European Union in March 2019,” it says.

27 June

London house prices: cost of living soars as market sinks

The number of £1m homes on sale in London has risen to a record high as buyers walk away from “vanity” asking prices.

Analysis from property portal Rightmove, shows there were nearly 20,000 seven-figure houses and flats on the market in early June, a record for the month.

With prices static or falling across most of London, the increase appears to be down to a growing backlog of expensive homes failing to sell in a tough buyers’ market, North London estate agent Jeremy Leaf told the London Evening Standard.

The findings are not limited to high-end properties, with Rightmove revealing there were 16.4% more London homes on the market this month compared to June last year, with the number of property sales in the capital down 5% on May 2017.

For two decades, the London market “has been characterised by turbo-growth”, says Business Insider UK. The average house price rocketed nearly 500% from £98,000 in January 1998 to £485,000 in January 2018, compared to the £227,000 UK average.

But a combination of Brexit uncertainty, diminishing demand among foreign buyers and increases on stamp duty have seen the rate of growth in London turn negative for the first time since 2009.

According to Rightmove, new homes on the market this month were priced 0.9% lower than last month.

City A.M. says “this represents the largest fall in the price of property coming to market since January, and also means that new sellers in London are marketing their properties at cheaper average prices than a year ago for the 10th month in a row”.

The Evening Standard says “buyers have been deterred by fears of taking on huge debt when the market is seen to be falling from all-time highs, the uncertain economic climate in the run-up to Brexit, and the high cost of moving”.

Housebuilder Berkeley Group, which builds luxury homes in the capital and the south-east, has warned profits were likely to fall in the coming year by about a third as Brexit uncertainty weighs on London’s housing market.

Yet, even as house prices tumble, the cost of living in the capital continues to skyrocket.

During the last 12 months, London has leapt from 29th to 19th in Mercer's annual Cost of Living Survey, which ranks 209 cities globally according to their relative costliness for international workers.

With a booming labour market and low interest rates, other cities are looking to steal a march on London and attract workers.

This has led to a surge in the price of apartments across the UK, with a new Halifax survey revealing prices for flats are rising faster than any other type of property.

The Daily Express says that although apartments make up just 15% of all home sales, “their relevance to urban labour markets is increasingly important”.

Jonathan Stephens, MD of Surrenden Invest, told the paper: “With dynamic local economies and solid labour markets, regional cities are an enticing prospect for those looking to make capital gains, whether as owner-occupiers or investors.

“In fact, the majority of investors we work with now come to us with a regional city firmly in mind - London has lost its shine as a residential investment prospect as the UK's other cities are producing better returns."

Liverpool and Newcastle are two cities that have particularity benefited from this new breed of regionally focused property investor.

London house prices: buyers in driving seat as supply overtakes demand

19 June 2018

A sustained drop in London house prices combined with an uptick in the number of homes on sale have put buyers firmly in the driving seat in the capital’s housing market.

According to the latest Rightmove House Price Index, average asking prices in London have fallen in two thirds of boroughs over the past year.

While the average drop across the whole of London has been a minimal 1%, prices continue to fluctuate massively across the capital.

A separate study from real estate firm Your Move, found the price of homes in the City and its surrounding areas fell 25.9% in the year to April, although this was only on a small number of sales, while prices in Southwark dropped 19.1% and in Wandsworth by 13.1%.

There were, however, gains in Kensington and Chelsea, London’s most expensive borough, which recorded double-digit growth, up 10.4% to £2.17m. The next highest increase over the year was Lambeth, where prices increased 5.8%.

Overall, 24 London boroughs have seen prices fall over the year, and just nine have seen them rise, according to the Your Move research.

However, “there is good news for house hunters”, says Homes and Property, with a significant 16.4% increase in the number of houses and flats on sale in the capital over the past 12 months, “giving buyers substantially more options”.

Tom Bill, head of London residential research at Knight Frank, said the increase in supply was partly down to some homes simply taking longer to sell. According to Rightmove, property now takes an average of 67 days to sell in the capital, compared to 59 days a year ago.

There has also been an uptick in investors selling up rental stock.

“This is the result of recent tax changes for landlords which, combined with a perception that sales values are bottoming out in some areas, has led to higher levels of supply in the sales market,” Bill said.

The fall in London “can partly be explained by the spring buying season coming to an end”, while the property market has also been hit particularly badly by uncertainty surrounding Britain’s impeding exit from the European Union, says Bloomberg.

At the national level, figures point to a steady market, “with a shortage of stock pushing up prices in northern regions and the south experiencing the opposite”, the news agency reports.

Vendors have said that this shift in the market means sellers need to set asking prices that are realistic.

“There used to be an argument for pricing a property high and trying your luck. However, there are no longer enough buyers in the market for overpriced properties to get attention,” says Tom Page, manager of Fyfe Mcdade estate agents in Shoreditch


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