House prices a year after the Brexit vote
London house price growth remains subdued in the year since the Brexit vote but the longer term picture is buoyant.
A year on from the Brexit vote and 10 years since the start of the financial crisis, the average sold price of a home in London hit £482,000 in June 2017.
The capital is one of the weakest regions in the UK for house price growth following years of double digit increases, with the annual price rise slowing to 2.9 per cent.
However, with wage growth stagnant, even a relatively small rise stretches affordability – London buyers have to find an extra £13,400 compared to last year, according to figures released by the Land Registry today.
“Along with consumer price hikes and falling wage growth, unaffordability is reaching a crisis point,” said Paul Smith, CEO of estate agent chain haart.
“This is creating real impact on the ground as we see first-time buyer registrations drop by almost 20 per cent on the year across our branches.”
The biggest house price growth was recorded in Kensington & Chelsea, where prices rose 12.8 per cent to £1.4 million; Hackney, where the average sold price was up 10 per cent to £550,000; and Camden, where prices rose 8.1 per cent to £834,000.
At the same time, seven London boroughs recorded negative or zero price growth, while a further 10 saw price growth that was less than or very close to the annual rate of inflation of 2.6 per cent, meaning price growth in real terms was stagnant and suggesting that the city is one of the areas hardest hit by the political uncertainty surrounding Brexit.
THE FINANCIAL CRISIS: A DECADE ON
Nonetheless, London has shown the strongest rate of recovery in the UK since the financial crisis, far surpassing its pre-crash peak of £298,600, recorded in October 2007. This is very different from the picture in some other UK regions.
“In cash terms, house prices in Scotland and Wales are only just returning to their pre-recession peak levels. Wales surpassed the October 2007 peak of £150,000 for the first time this month, reaching £152,000, whilst in Scotland prices remain just below the May 2008 peak of £146,000 at £144,000 in June 2017,” said Richard Snook, senior economist at PwC.
“Prices in Northern Irelandremain around 40 per cent below their pre-recession peak at £129,000 in June 2017. They had reached £225,000 in September 2007 having been caught up in the wider property bubble.”
England was the only part of the UK to record prices significantly higher than the previous peak, with average sold house prices up from £195,000 in September 2007 to £238,000 this month.
EAST OF ENGLAND STILL ON THE UP
There is strong regional variation in the strength of the housing market even within England, however.
The East of England continued its 14-month streak as the top region for house price growth, with sold prices up 7.2 per cent to £287,000 compared to last year, thanks in particular to strong performances in commuter hotpots such as Essex (up 9.9 per cent), East Cambridgeshire (8.8 per cent) and East Hertfordshire (8.7 per cent).
Seaside locations also fared well, with significant rises in North Norfolk (9.5 per cent) and Suffolk Coastal (8.8 per cent).
Meanwhile prices in the North East have been rising at the slowest rate for the past 15 months, up just 2.5 per cent, or £3,000, in the year to June.