There are signs that London is still adapting to its prolonged years of significant house price growth, as the average asking price has dropped by £22,000 over the last year.
However, this period of growth has meant that despite the average house price in the UK being £297,587, the average homeowner in London is holding an asset worth more than double, at £600,926. This is even though every other single region in the UK other than London has experienced growth in the house price over the last year.
In fact, Greater London has seen prices decrease by 3.5% on average in the last 12 months, by far the worst performing region. In just one month after the New Year £9,000 had been wiped off asking prices in the capital as sellers try to entice the dwindling number of new buyers in the region.
As always averages only tell a part of the story though, as most of this dip has been caused by stagnating sales and dwindling house prices in the most expensive areas of London’s central market. In Zone 1 there has been a 17% reduction in the number of listings compared to the same time period last year. There have been some areas in London, outside of the prime central which have experienced modest growth in the last year.
“While Zone 5 has also dropped marginally year-on-year, it is property in Zones 2 and 3 that has been the biggest contributor to London’s 3.5 per cent annual fall,” says Rightmove director, Miles Shipside.
Compared to the other regions though London is at the bottom of the pile. At the top are the West Midlands, Wales, and the North West, which have experienced average growths of 5.8%, 5.7%, and 5.5% respectively.
The West Midlands, which is primarily driven by the Birmingham market has seen the average property price rise to £215,000 and it also boasts the fastest listing to sale periods of any region in England and Wales.
This has meant that compared to last year the pace of the growth has remained relatively similar, however agreed sales numbers are still down across the UK. This points to both the market holding its breath as it waits for Brexit and there still being a tightness in buyers’ affordability.
“Setting tempting asking prices and then quickly reducing them if there is little initial interest will be key to turning this promising level of buyer activity into actual sales, especially in the less active sectors and locations of the UK,” says Shipside.
The breaks offered to first time buyers on property below the £300,000 mark have meant that demand for this sector of the market has been booming lately, and with the number of homes being built still falling short of the number needed this shows no sign of stopping.
Shipside predicts: “Those selling to ‘quick-off-the-block stamp-duty-saving first-time buyers’ are set to have a busier first quarter than those trying to sell in other sectors.
“We expect that many first-time buyers will act fast to satisfy their appetite to get onto the housing ladder and secure their property at today’s prices, before any stamp duty savings are eaten up by rising property prices.”