London house prices: Homes in the capital lose value despite the UK’s resilient property market
London house prices fell 0.3 per cent in the year to September, according to Office for National Statistics (ONS) data released today.
Growth in the capital lagged far behind the UK-wide average, which was 3.5 per cent, a small increase from 3.1 per cent last month. The growth puts the average house price across the country at £232,554.
But homes in the capital did not decline as badly as they did in August, when prices fell by 0.6 per cent.
The figures from the ONS and Land Registry show the disparity between the London property market, which has been in decline since March, and other parts of the UK. Growth was fastest in the West Midlands, where house prices increased 6.1 per cent.
The decline in growth reflects uncertainty around Brexit, with London taking the brunt of lower buyer confidence, according to property experts.
Richard Snook, senior economist at PwC, said: “London remains the biggest regional story as the price decline continues, albeit at a modest rate.
“London is one of the most internationally dependent parts of the UK, due to economic integration with Europe and the high share of foreign citizens in the labour market.”
“Therefore, the greatest impact of Brexit-related uncertainty was always going to be felt in the capital,” he added.
In its November inflation report the Bank of England suggested the London market has been disproportionately affected by regulatory and tax changes and lower net migration from the EU.
But the London market has also been impacted by rapidly rising house prices in the capital, which have left many potential buyers unable to afford a home.
At £482,000, the average house price in London is more than double the average of the rest of the country. The most expensive area is Kensington and Chelsea, where the average house costs just under £1.5m.
Head of residential property at Sotheby’s International Realty, Guy Bradshaw, blamed “punitive” stamp duty costs.
“When will the government start listening to the industry and stop ignoring these figures? London estate agents have been banging the drum for a stamp duty reform for years and today’s figures clearly show a suffering market,” he said.
A breakdown of growth by borough shows the fall mainly impacts central London properties, with outer London boroughs such as Brent and Redbridge seeing a rise in house prices.
North London estate agent Jeremy Leaf said: “Once again we are seeing prices softening but no dramatic change, underpinned by low mortgage rates and supply.
“The price falls in London are masking a more resilient picture elsewhere in the country, underlining how misleading it can be to judge the market as a whole by what is happening in one region.”