Experts agree that house prices in London will keep falling, as the market has just suffered its worst month since the post-financial crisis year of 2009.
Lots of reports are showing the capital’s housing market as experiencing its worst time in almost a decade, and surveyors expect this to continue. It looks like prices will fall even more over the next 12 months, according to multiple sources.
Prices falling
A highly regarded survey from the Royal Institution of Chartered Surveyors (Rics) published just days ago, has come hot on the heels of other surveys reflecting a declining demand and falling prices in London property in 2018.
Dropping prices have also been reported outside London in other areas within the south east of England, pointing to a wider problem for UK property prices.
Official figures
The official figures show that house prices in London are down in nominal terms compared with July 2016 in the immediate aftermath of the vote to leave the EU. Rics expects to see prices experiencing a further drop over the next 12 months. The report said: “Expectations remain downbeat in London, with 20 per cent more respondents predicting a further decline over the year to come,” the report says.
The price balance according to Rics also fell nationally by 8% in April 2018. This drop is heavily weighted by the drop in the London market, according to the report.
Market outlook
The figures from Rics came just after similar data was released by Halifax, showing that UK house prices fell by more than 3% in April 2018, following a smaller rise of 1.6% in March 2018.
The information from Rics more accurately represents the market as a whole, rather than just the specific customers to Halifax. However, both these reports are concerning for those with money invested in London’s property market as we wait to see what other developments this year will bring.
Rics is one of the most reliable indicators of trends in the London property market, so we could be seeing a rough time for property investors. As spring is usually the busiest time of year for people moving house, it is a good guide for activity during the rest of the year.
Cooling market
However, just because the market is volatile and going through price drops, this doesn’t mean a crash is imminent. The market is cooling, and this is perhaps inevitable following many years of sustained price increases. While it can seem as though prices are crashing, actually it’s an overheated market cooling down, and gives no reason for investors to panic.
It’s a positive time for buyers as both mortgage rates and house prices are staying lower. This is supported by recent lending data showing an increase in the number of first-time buyers getting on the all-important property ladder.
It will be interesting to see what the rest of this year brings, particularly as we head towards the UK leaving the EU in March 2019. Stay tuned.
About Samir Salya
Samir Salya is the Chairman of Reign Holdings and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing.