The ups and downs of UK’s housing market is rarely out of the news with escalating prices and the occasional drops making headlines. Currently, London’s house price slump has deepened as the market enters its traditional summer lull, with experts signalling a boon for prospective first-time buyers. The average asking price of a house in the capital is down by more than £11,000 compared with this time a year ago, marking the sharpest fall since January.
The closely watched Rightmove house price index, also reveals that properties with two bedrooms or fewer tumbled 3.5 per cent, or £18,000, in this month, compared with a year earlier. This is a sector where first-time buyers are most active. The findings, which also show that overall asking prices in London fell 0.5 per cent from June to July, are the latest in recent days to underline the growing evidence of a slowdown in London’s property market.
Last week. PwC, one of the Big Four accountancy firms, predicted that London house prices were likely to fall as much as two per cent this year despite an expected rise in every other region of the UK. The Royal Institution of Chartered Surveyors (Rics) said more surveyors have seen a decrease, rather than an increase, in house sales for the past 16 consecutive months.
Housing expert at Rics, Henry Pryor said: “The fourth quarter of this year and first quarter of 2019 are going to be hard in the six months’ run-up to our actual divorce from the EU. People will be sitting on their houses until the dust blow over.” However, findings show that the number of properties on the market jumped by 8.6 per cent in July compared with the same period last year, while there was no corresponding increase in the number of house buyers.
Rightmove explained that “sellers are going to have to work harder to attract a buyer”, with sales agreed by estate agents looking virtually flat (minus 0.2 per cent) against the same month in 2017. Rightmove director and housing market analyst, Miles Shipside, said: “It’s been well documented that the top end of the London market has been struggling for the past couple of years, but new seller asking prices in the lowest priced sector are now experiencing a larger percentage fall than these high-end properties.”
Within London, several boroughs have seen the sharpest house price drops this month. Head of lending for the Mortgage Advice Bureau, Brian Murphy, said: “This month’s report suggests that asking prices have flattened in many parts of the UK, partly as a result of the distractions of unusually hot weather but also as the disparity grows between what vendors believe their property is worth at first listing, and what the market will actually stand.”
Head of London residential research at estate agents Knight Frank, Tom Bill, said: “London is now underperforming after years when London would outperform the rest of the UK. That situation has now reversed.” He added: “The overall picture is one of low interest rates, low levels of unemployment and relative lack of supply which are all putting upward pressure on prices.
“But lack of supply also leads to affordability constraints, which is one reason why London is underperforming compared with the rest of the UK.” While the accountancy giant estimates the average house price in the UK will have jumped from £221,000 last year to roughly £285,000 by 2025, a bump in the capital is not set for at least another year and a half.
Senior economist at PwC, Richard Snook, said: “Affordability in the capital has been stretched due to three factors: a high deposit saving hurdle, increased economic uncertainty relating to Brexit acting as a drag on international investment, and reduced numbers of housing transactions due to stamp duty changes.”
A spokesperson for the Ministry of Housing Communities and Local Government added: “We have set out an ambitious programme to boost housing supply — including planning reform and targeted investment to help us deliver an additional 300,000 properties a year by the mid-2020s.”
Founder and managing director of online estate agency House Network, Mark Readings, said: “The market will only start to show signs of recovery once political uncertainty fades and international confidence in London is regained. Once that happens, I am confident London will return to being the vibrant property market it was.”
(By Andy Jalil – our foreign correspondent based in the UK. He can be reached at email@example.com)