Spring property report:house prices drop in two out of three London boroughs in temporary market slowdown
House prices across London are now in widespread decline, according to the Spring property report, with drops in two out of three boroughs over the last year, but experts agree the slowdown is temporary, with a recovery forecast for 2021.
The past 12 months has been something of an annus odiosis(disagreeable year) for the capital’s property market according to the latest Rightmove research.
Although prices continue to creep up across the rest of the UK, London experienced a fall of 0.2 per cent. Prices in the south east are 0.1 per cent down.
“The last time the south east recorded an annual price fall was in 2011, indicating that the softening in the London market is now spreading to its commuter belt,” said Miles Shipside, Rightmove’s commercial director.
Simultaneously, sales volumes in the capital fell by almost seven per cent, and the number of sales agreed in the south east dropped 8.5 per cent in the same period.
Andrew Matin, managing director of Harrisons estate agents in Canary Wharf, blames low sales on the evaporation of buy to let landlords who have been largely driven from the market by higher taxes.
And Jonathan Hudson, founder of Hudsons Property, said that many homes are failing to sell because their owners are still holding out for top prices and are in no mad rush to sell.
“We have noticed that sellers who have a strong reason to sell like job relocation, break up, or a probate sale are far more likely to agree a sale,” he said.
Only four boroughs managed annual price growth above two per cent in the last year, led by Redbridge (up 4.1 per cent to an average £474,000), and Barnet (up 3.6 per cent to an average of £666,000).
Jeremy Leaf, principal of Finchley estate agent Jeremy Leaf & Co, said: ‘The Barnet housing market is performing better than other boroughs partly because of its greater affordability compared with adjoining areas as well as the attractions of the local infrastructure, where education is a big draw.
“Those selling flats closer to the centre of London because they need more space are finding they can afford larger family houses in Barnet or other London suburbs.
Of the ten boroughs to see positive annual price growth no less than seven had average values of less than £500,000, with Barking and Dagenham the best value at an average price of just under £314,000.
The worst falls of the last year were experienced in Ealing where prices slipped almost four per cent to an average £563,000.
Both Harrow and Hammersmith & Fulham suffered falls of 3.5 per cent, to an average of £563,000 and £930,000 respectively.
And the great Hackney juggernaut finally seems to have stalled. Prices fell 1.7 per cent year on year to an average of just below £657,000.
But Hudson believes the currently gloomy outlook is only temporary: “London is catching a breath but once the majority of buyers realise that Brexit isn’t changing the day to day way we live our lives and the continued house shortage, you can guarantee it will start to rise again.”
Lee Layton, associate director of research at Cushman & Wakefield, believes that the current impasse will continue for the next 18 months, but London will see growth of five to six per cent in 2021 “as the pent-up demand from the preceding years is released onto the market”.
“Following this, we would expect annual house price inflation rates to normalise at between 3.5 to five per cent as we head towards the later part of the 2020,” he said.