House prices in the UK fell by 1.2% in September, the third fall in the last four months and the first monthly fall for this time of year since 2013.
The capital saw a 3.2% annual price drop, bringing asking prices to an average of £611,000 the latest House Price Index from Rightmove found.
The price drop was primarily driven by the softening market in London’s most expensive, or prime, boroughs, while prices continued to rise in the city’s most ‘affordable’ boroughs. The average asking price of a home in Kensington and Chelsea plummeted by more than £300,000 between August and September, and Camden was also hit hard.
It suggests that a slump in the high-end central London market, described by Rightmove as a ‘readjustment’, may be gathering pace as Brexit uncertainty continues and tax changes prompt many wealthy investors to sit on their hands.
Hackney and Southwark, two of the cheapest boroughs in central London, saw price growth of 9.5 per cent to £660,000 and 7.2 per cent to and £630,000, respectively — the highest in the capital.
It means that a new seller in Camden is marketing their property for almost £74,000 less than they would have done exactly one year ago, while a new seller in Hackney is asking for almost £63,000 more than they would have done in September 2016.
Miles Shipside, of Rightmove, said that falls in asking prices in the south of the country had turned this month into “a bit of a damp squib” for property prices, while some northern regions were still showing marginal signs of upwards price pressure.
“Estate agents are clearly advising many sellers that they have to lower their price expectations to fit in with buyers’ stretched financial resources, with that price compromise hopefully generating extra buyer interest,” he said.
Rightmove said it measured more than 98,000 asking prices, which represented around 90% of the UK market. The properties were put on sale between 13 August and 9 September. A spokesman said its updated methodology went back to 2010, and the annual fall of 3.2% for London was the largest drop so far this decade. The monthly fall in the capital is the largest since December 2016.
In spite of these factors, however, the number of sales being agreed by estate agents is 4.8pc higher than the same period a year ago, with all regions being up, including London – despite its large monthly price fall.
“In the current market, sales volumes have dropped in prime central London, and the market has softened to some degree,” said Roger Collings, branch manager at real estate company RE/MAX in London. “We are finding that most homeowners are not in any hurry to get rid of their properties, which has resulted in fewer listings available to buyers and fewer sales.”
“In 2009 until 2015 the central London market was inundated with investors looking to purchase property as a way to invest their money in a safe financial environment,” Mr. Collings said. “However, since the introduction of the 3% surcharge on stamp duty paid by investors, along with the uncertainty as to how Brexit will impact London’s property market, investors have been standing on the sidelines.”
DMZ thinks that this drop in prices shows the importance of knowing your area in London inside out before purchasing. Traditional sourcing metrics such as transport hubs and good schools should of course be front and centre, however picking a location that has room to appreciate and grow could be the deciding factor on who win’s and loses in London property over the next 5 years.
For more on London locations with room to grow: