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London house prices

London house prices: property value climbs at fastest pace in two years

Jan 16, 2020
The Week Staff

Property market was rebounding even before post-election ‘Boris bounce’

Peter Macdiarmid/Getty Images

UK house prices climbed at their fastest rate in two years even before the December 2019 general election delivered an additional “Boris bounce”. 

According to the Office for National Statistics, the property market was already rebounding before Johnson’s election triumph, with growth accelerating to 2.2% year-on-year in November, up from 1.3% the previous month.

Wales saw the strongest growth, a leap of 8%, while London saw its prices rise by 0.2%. On average, house prices across the UK hit a record high of £235,000.

The London Evening Standard reports that, “although the average price of a home in the capital fell 0.5 per cent in November to £475,458”, prices did rise year-on-year for the second time in the last three months.

The paper adds that boroughs with hefty annual rises included Camden (6.8%), Barking & Dagenham (4.9%), Haringey (4.5%) and Tower Hamlets (4.4%). The biggest falls were in the most expensive boroughs, with Kensington & Chelsea seeing a 12.6% decline and Westminster seeing an average price fall of 8.8% to below the £1m mark.

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Speaking to The Telegraph, PricewaterhouseCoopers economist Jamie Durham said: “Assuming everything goes smoothly during the transition period, and the economic environment remains resilient, we would expect to see house price growth to strengthen this year.”

The paper adds that the North East has seen the worst recovery in England after prices plunged during the financial crisis. Prices in the North East are yet to rebound above their pre-crisis peak, holding at £131,000.

Political stability and Brexit certainty to boost spring market

19 December 2019

London’s troubled property market looks set to finally turn a corner after last week’s surprise election result provided much needed political stability and certainty on Brexit.

 Boris Johnson’s landslide victory looks to have already boosted buyer confidence in the capital, with a mini surge in overseas investors completing deals over the past week.

“Super-prime buyers who were fearful of a government led by Jeremy Corbyn, or indeed just a government that included Corbyn, are now reassured that we have a government that won’t punitively tax their wealth,” reports The Daily Telegraph.

Experts predict a “short-term uptick”, as foreign investors move to buy property before the pound rises further and before a 3% surcharge on overseas buyers is announced in a new year Budget, says the paper.

On Friday one super-rich European family bought a house in central London for £65m, saying their decision was a direct result of Johnson’s election victory.

The Guardian reports that the family instructed the luxury estate agent Beauchamp Estates to buy the property in an undisclosed “prime central London” location, “as investors and the very wealthy celebrated the 80-seat majority”.

Chestertons, an estate agent with offices in 30 upmarket locations around the capital, said a bounceback in London prices could be swift.

Data released from the Office for National Statistics on Wednesday found annual house price growth across the country had slowed to its lowest level since 2012.

This is Money says the data “bears the hallmarks of a stagnated housing market hampered by uncertainty over the general election and Brexit”, but “many industry insiders think the figures mark the end of an era, with a ‘Boris bounce’ poised to take hold”.

With a large majority, the Conservatives look set to pass the EU Withdrawal Bill before the end of January, ending over three years of uncertainty around Brexit.

“This should mean more owners getting off the fence and putting their homes up for sale, resolving one of the capital’s major property problems: a lack of stock for buyers to choose from,” says Homes and Property.

“It will not, however, help the affordability crisis, particularly as there are no signs that stamp duty will be reduced in Boris Johnson’s February Budget.”

Rightmove, the UK’s biggest property website, said that the election result could pave the way for increased housing market activity this coming spring, with average asking prices predicted to rise by 2% in 2020. 

However, Rightmove director Miles Shipside warned of “regional variations” that will see the north outpace the south east and the capital.

“London is finally showing tentative signs of bottoming out, but we expect a more modest price rise of 1% in all of the southern regions where buyer affordability remains most stretched,” he said.

Has the property tide turned?

9 December 2019

UK house prices were 2.1% higher last month than they were a year ago, according to Halifax’s latest house price figures.

The unexpected stats have stoked optimism among experts, even for London, the area worst hit by the market downturn.

Overall prices also grew on a monthly basis, rising 1% from October. The new data brings to an end back-to-back months of declining growth as November’s gains wiped out the previous months losses.

The average house price is now £234,625, surpassing 2019’s previous high of £234,195, recorded in February. Estate Agent Today says the package of good news comes as a “surprise” to the market.

Lucy Pendleton, co-founder-director of independent estate agents James Pendleton, says “buyers’ appetites” have returned and she believes the news is promising for the capital.

In London, she says, “a big jump in the number of sales going to best-and-final offers is going hand in hand with increasing footfall through front doors”.

Joining the chorus of optimism, Jonathan Hopper, managing director of Garrington Property Finders, told City AM that “a clear election result could turbocharge the typical New Year surge in demand”.

The news brings a stark change of mood from October, when it was revealed that concerns over Brexit and affordability saw more than £2bn wiped off asking prices in London in six months.

Has the tide of gloom suddenly turned? asks The Telegraph. “The key message from most is modesty,” says the newspaper.

Stone Real Estate founder and chief executive Michael Stone was among those urging caution. He said that despite the increased momentum, an end to political and economic uncertainty is badly needed.

Russell Galley, Halifax managing director, says: “While a degree of uncertainty remains evident, it’s also clear that buyers and sellers are responding to factors such as improved mortgage affordability and the limited supply of available properties.”

London house prices: £2bn wiped off total asking price

18 October 2019

Concerns over Brexit and affordability has seen more than £2bn wiped off asking prices in London since April, new research has revealed.

Online estate agent and lender Nested found that, over the past six months, jitters in the London residential market have pushed estate agents to advise sellers to offer price cuts totalling £2.1bn.

The biggest cuts came in Westminster and Kensington and Chelsea, with £408m and £220m respectively coming off original prices.

“Those areas contain some of the capital’s most luxurious homes,” says the London Evening Standard, with “the prime sector has been hurt by higher taxes and reduced demand”.

The Financial Times says “the chilling effects of the UK’s political tumult on the London housing market have lasted much longer than the immediate aftermath of the referendum, particularly for the wealthy buyers in the prime central areas of the capital”.

Transactions have fallen by about one-fifth in the London market since the vote, and appear to have slowed further in recent months, according to Land Registry data.

Yet there are signs some international buyers are being drawn back, attracted by the drop in sterling since the referendum.

“While the transaction figures show a continued slowdown in activity, some property professionals have noticed a pick-up in interest from buyers who had been sitting out the market” says the FT.

Buyers in the £1m-£5m range remain cautious but more are getting on with decisions they had parked in the wake of the referendum, says Camilla Dell, founder of Mayfair-based buying agent Black Brick.

“There comes a point when you have to ask yourself how long you’re prepared to wait. Some of these buyers are fed up of paying rent and feel the market has come down far enough for them to come back” she says.

This could be a good omen for the rest of the market. Jonathan Hopper, managing director of buying agency Garrington Property Finders, told Homes and Property: “While the capital still has the unwanted honour of being the region where prices are falling fastest, prices in the inner boroughs are beginning to settle and historically this is often seen as a precursor to a wider recovery across London.”

This view was echoed by Matt Robinson, boss of Nested, who told the Evening Standard that while “the endless uncertainty around Brexit has had a profound effect” on both buyers and sellers, there are opportunities for bargains.

“With money still relatively cheap to borrow and prices falling in some places, buyers can realistically snap up properties they couldn’t have afforded in a stronger market.”

Capital out of ‘bubble-risk territory’

3 October 2019

Cooling London house prices have pushed the capital’s real estate market out of “bubble-risk territory” for the first time in four years, according to a new UBS report.

While the Swiss bank said London “remains overvalued”, the days when house prices soared by 50% between 2012 and 2016 “are long gone”, with affordability and ongoing Brexit uncertainty driving market weakness.

The end to London’s housing boom has pushed the capital down on the UBS index, which ranks the cities with the biggest real estate bubbles in the world.

Munich tops the table as the most overvalued housing market globally, while Frankfurt and Paris are new additions to the bubble risk zone, “with low interest rates fuelling a wider Eurozone bubble risk”, says City A.M.

In the UK, concern around Brexit uncertainty and affordability appears to have spread to other major urban areas.

A new index published by property website Zoopla found not a single one of the UK’s 20 biggest cities saw annual property growth edge above 5% in August - the first time since 2012 that this has happened – with “the market is in the process of adjusting to more realistic pricing”, reports Sky News.

Richard Donnell, research and insight director at Zoopla, said the market is “throwing off mixed signals”. He added that, while Brexit was complicating the outlook for house prices, southern cities in particular had seen a reduction in cash buyers, which “we believe is down to a decline in investment-buying across high value cities”.

London and the South East of England remain the worst-performing areas. According to the latest Nationwide Index, average prices in the capital slumped 1.7% in the last quarter, while in the outer metropolitan region, which includes London commuter towns, prices dropped 1.5%.

“London has now gone through nine successive quarters of falling prices. However, the average price remains around 50% higher than at its 2007 peak,” says The Independent.

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