A tale of two cities: London house prices fall again, but property in outer boroughs is still on the up
The last 12 months have been a game of two halves in the capital, with average asking prices in outer London holding steady while central London flounders.
However Rightmove found that asking prices in more unaffordable inner London are down 2.5 per cent year on year.
The biggest losers are Lambeth, where prices are down 6.8 per cent, Hackney, down 4.9 per cent, and Tower Hamlets, down 3.9 per cent.
WHY ARE PRICE RISES NOT THE SAME ACROSS LONDON?
Andrew Matin, managing director of Harrisons estate agents, believes the inner/outer divide is down to differing buyer motivations.
“Outer London generally has much more appeal for families and purchasers will typically occupy the properties themselves,” he said.
“People need somewhere to live regardless of influences on the market. Inner London, however, is more investment focused, and 2018 has seen inactivity throughout this more central market as a result of high supply … [as] … investors trying to dispose of assets and exit the market, and low demand following increased tax liability and economic uncertainty.”
Russell Quirk, founder of Emoov, added: “Inner London has performed worse given that prime central London rose in value significantly in 2012, 2013, and 2014 and therefore it overheated and has had a higher level from which to fall. The stamp duty penalisation on properties above £1.5m has hit that part of the market hard.”
Across London Rightmove reported that average asking prices are down £10,000 (1.7 per cent) over the past month alone.
WHAT DOES THIS MEAN?
The fall is significant because although an end-of-year slump is normal – vendors traditionally set lower prices in an attempt to get their homes sold before the New Year – this is the biggest November fire sale since 2012.
“The pre-Christmas price slowdown seems to have come early this year, which gives buyers extra negotiating power to pick up a cheaper deal,” said Miles Shipside, Rightmove director and housing market analyst.
“With nine per cent fewer new sellers coming to market compared to the same period a year ago, it appears that those who are less willing to price down are staying off the market, perhaps until there is more Brexit certainty or prices recover. Meanwhile those who are taking the plunge are recognising that they need to price lower to sell.”
However affordability remains a key issue.
There is now only one London borough where average asking prices are less than £350,000 – Barking and Dagenham, where average prices stand at £314,816, up 1.5 per cent in the past year.
A TRICKY YEAR FOR CENTRAL LONDON
Matthew Kaye, director of Kaye & Carey believes 2019 will be a tricky year for central London.
“Until we have more clarity over Brexit, buyers will remain nervous and reluctant to commit,” he said.
“The most highly prized blue chip homes will continue to sell but any property with an inherent defect such a being on a main road, in a basement or a ‘walk-up’ will struggle. The volume of transactions will continue to be low.”
In outer London Kaye is more hopeful. “As yields in inner London remain unexciting, overseas investors will continue to look at outer areas — often competing with owner-occupiers — so prices are likely to remain stable or rise in those areas with limited stock,” he said.