It’s difficult to ignore the headlines concerning London property at the moment. Depending on where you look, London’s property market is either growing much slower than the rest of the UK or decreasing at the fastest pace since 2009.
Either way, there is plenty of evidence to suggest the market is stagnating. According to Bloomberg’s analysis of figures from the UK Land Registry, only one borough is holding its own. Brent has shown an annual price growth of 10%, but despite this, prices are under pressure everywhere in London, with no signs of a recovery any time soon.
Widespread decrease
This widespread decline in prices is borne out by drops in two out of three London boroughs over the last 12 months. However, while there is no imminent recovery on the horizon, experts agree that this property slowdown is going to be temporary and expect a recovery post-2021.
Rightmove shows, along with many other analyses, that the last 12 months have been difficult for London property prices. While property prices are creeping up across many other regions of the UK, London is struggling with an overall drop of 0.2%. Similarly, prices in the south east of England, traditionally a rising market, are down by 0.1%.
According to Rightmove, the last time that an annual price fall was recorded in the south east was in 2011. This indicates that the softening market in London is spreading out into its traditionally strong commuter belt.
Drop in sales volume
At the same time, sales volumes dropped by around 7% in London, and by 8.5% in the south east. This is likely because of the decreasing number of buy-to-let landlords who have moved away from London’s property market due to the increase in taxes.
Another major contributing factor is that property owners are in no particular rush to sell and so are continuing to hold out for the prospect of higher prices. It’s no surprise that sellers with strong reasons to sell, such as moving jobs, divorcing or probate sales, are more likely to get a sale agreed than those who can afford to wait.
Annual growth
Just four London boroughs recorded annual price growth of more than 2% over the last year. Redbridge went up by 4.1% to an average price of £474,000, and Barnet was up by 3.6% to an average price of £666,000.
Barnet is performing stronger than other boroughs partly due to the fact that it’s more affordable when compared with other areas of London. People selling apartments closer to the centre of London are finding that they can afford much larger properties in suburbs like Barnet.
Out of the ten boroughs in London that have seen a positive growth in prices, seven have average values of less than £500,000. The best value boroughs are Dagenham and Barking, which both have an average price of just less than £314,000. The highest falls have been seen in Ealing, where prices slipped by almost 4% to land at an average of £563,000.
Temporary outlook
So, how long will this gloomy outlook last? Experts believe that it’s just temporary and that while London is undoubtedly slowing, the majority of buyers will soon realise that Brexit isn’t going to change how well live day-to-day. With the current shortage in houses across London and the UK, it’s guaranteed that prices will start to increase again.
The market is at an impasse right now, as we all wait to see exactly what Brexit will bring. However, it’s likely that London will recover to see a growth of up to 5% in 2021. Following this, it’s expected that annual house price increases will normalise at between 3.5 to 5%.