It’s safe to say that the London property market has weather a rough year in terms of house prices, with recent figures showing no signs of the situation improving anytime soon.
According to data released by the Office for National Statistics (ONS), house prices in London fell 4.4% per year. This counts as the largest drop in property prices since August 2009, where properties prices in the capital plummeted 7% in the aftermath of the financial crisis. This is part of an overall sluggish year in the property market so far, but one which has hit London far worse than the rest of England.
This may all look like bad news for investors, but for buyers, this makes London a far more attractive prospect in terms of than it has been in a number of years. Of course, this is all has to be taken in context of the local property market, as the average property price in London still remains a staggering £457,000. – although this down 6.7% from the height prices reached in 2017, according to the ONS.
Impact of Brexit Uncertainty
The uncertainty of Brexit has in many ways been to most certain thing about the UK’s withdrawal from the European Union. It should come as no surprise that this has been a key factor in the ongoing decline of London property prices. The political uncertainty it has caused is partially responsible for the overall sluggish growth in the UK property market, and the sharp decline in the local housing market in the capital.
On a broader scale, Brexit uncertainty has led to house price inflation dropping 0.3% from April to May with no signs of rising anytime soon.
House Prices Still Far Higher Than National Average
On the surface falling houses prices in the capital looks like good news for buyers, but you have to keep in mind that it is still incredibly difficult for first-time buyers to get on the property ladder in London as property prices remain firmly higher than elsewhere in the country, and indeed the national average. Combine this with the current political climate, and the reluctance of buyers to make a big purchase and you are left with a local property market that is quickly dropping, but not at rate high enough to attract significant interest from buyers.
Even with a massive dip of 1.9% in selling prices in the year to March – when the UK was originally set to leave the European Union – London house prices are around four times that of the national houses, although they have not actually risen since the start of 2018, according to data from the Land Registry.
One of the main issues with this drop, however, is that it has occurred in the most expensive boroughs in the centre of the city, which have long been deemed as out of the price range of everyday buyers, mostly attracting foreign investors. So, even a 16% slump will make no real difference to most people currently looking for a property, especially first-time buyers. As it stands, prices in Chelsea and Kensington are currently at an average of £1.16M, down from £1.39M.
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