London house prices: property market strongest since before the Brexit vote as experts warn of volatility from coronavirus and stamp duty ahead

Asking prices in London have increased this month by the highest amount since before the Brexit referendum, although commentators sounded a note of caution given the new uncertainty caused by the coronavirus pandemic.

The average price of a home in the capital is now £639,000, an increase of 5.1 per cent in the year as the number of people looking for a home outstripped the rise in the number of homes being put up for sale.

In its monthly house price index, property portal Rightmove said sales agreed rose by 34.4 per cent to reach the highest figure for this time of year since 2016, while house price growth was at its highest since May the same year. It also took 15 days fewer for homes to sell once they’d been put on the market.

“What we’re seeing in the London market at present follows what the numbers are saying. Our applicant numbers and new registrations are up by close to 40 per cent on last year, and although our stock levels have increased from January, year on year we are still 30 per cent down on combined property,” said Louis Harding, head of London residential at Strutt & Parker.

However, Rightmove’s monthly house price index is based on figures collected before the Government escalated its response to Covid-19 from “contain” to “delay”.

“The current fast pace of the housing market could now be affected by the spread of the Covid 19 coronavirus. We expect that housing market statistics, like other economic indicators, could be prone to volatility over the spring and summer.

"However, the market fundamentals are still very sound, hence the current surge in activity, which has included Rightmove’s five busiest days ever,” said Rightmove’s Miles Shipside.

Some even sounded a note of optimism over the virus. “As an industry, we are yet to see the impact of Covid 19 on the market. However, if fewer people opt to holiday abroad over summer, we could perhaps see an increase in activity in this traditionally slower period,” said Nick Leeming, chairman of Jackson-Stops.

The biggest price rises were at the top of the property ladder, with the most expensive homes up 6.8 per cent compared to a year ago.

The borough with the highest annual price rise was Lambeth in inner south London, with an 8.6 per cent increase on a year ago to £656,600. The capital’s most expensive borough, Kensington & Chelsea, saw the second highest price rise of 6.8 per cent to £1.6 million.

Sutton registered an average price of £479,000, with Westminster on £1.5 million and Waltham Forest on £502,000.

Only one borough, Havering in outer east London, saw prices fall year on year, with the average asking price down 0.9 per cent to £410,000.

Chancellor Rishi Sunak’s first Budget included a two per cent stamp duty surcharge for overseas buyers of UK property, which is predicted to have a particular impact in higher-priced parts of London where foreign buyers tend to be concentrated.

Tom Bill, head of London residential research at Knight Frank, said: “There has been a clear response in the London property market following December’s decisive general election result. In the second week of January this year, Knight Frank registered the highest number of new prospective buyers in London for 15 years.

“However, it should be noted that 2019 was the strongest year since 2014 for prime London markets, having already been in recovery mode.

“This uptick is the result of price corrections, ultra-low interest rates and a weak pound. Despite this upwards momentum, the current volatility on global financial markets and the Government’s proposed stamp duty changes demonstrate the market still faces headwinds."