House prices: UK property market gets an early spring boost despite annual price falls across London

Asking prices in Greater London have fallen year-on-year for the 20th month in a row as political turmoil continues to grip the capital’s housing market.

This record spell dwarfs the previous run of negative annual asking price growth which lasted for 14 months from the start of June in 2008 to the end of July 2009, which was caused by the global banking collapse and the house price crash that followed.

The current affordability crisis combined with the prolonged period of Brexit negotiations — which are now due to rumble on until the new deadline of October 31 — has quashed demand for new homes.

“Affordability limits and the uncertain political backdrop continue to hold back the market,” reports Rightmove in the latest housing price index for in April.

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Monthly house price data tends to be volatile, however several different annual indicators tell the same story: asking prices were 2.2 per cent below this time last year, taking the average asking price across Greater London to £614,250. The number of properties coming to market is down by 12 per cent, while the number of sales agreed has dropped by 5.6 per cent.

The report revealed the same pattern in inner London, where asking prices fell 1.3 per cent to £757,773 over the last 12 months, and a drop of three per cent from April-to-April to £512,726 in outer London.

However, with average prices bursting through the £500,000 threshold, this shows that the affordability crisis has now spread to what was deemed to be the affordable periphery of the capital.

This also coincides with a new report from the property group CBRE, published only last week, which ranked London the eighth most expensive city for house prices, behind New York, Barcelona and Hong Kong.

Meanwhile, while prices jumped across Britain by 1.1 per cent in a month, the average asking price across the UK dipped very slightly over 12 months to April by 0.1 per cent to £305,449.

Referring to the extension to the UK’s exit from the European Union, Shipside says: “There are no doubt more twists and turns to come but this extension could give hesitating home movers encouragement that there is now a window of relative certainty in these uncertain times.”

The new data did show that the average asking price had nudged up slightly by 1.1 per cent (or £6,694) from March this year to April across Greater London — the biggest month-on-month uplift seen at this time of year since 2015.

Rightmove analyst Miles Shipside puts this down to the spring selling season getting underway in London's most central zones.

“The rise in new seller asking prices reflects a stronger inner London performance. More sellers of expensive homes are coming to market in time for the traditional Easter pick-up, and there are tentative signs of market recovery after some large price re-adjustments in prime central locations,” says Shipside.

Becky Fatemi, founder of Rokstone Properties in Marylebone, says there are “green shoots” or a “glimmer of hope” in these inner London areas despite political or economic storm clouds.

“I have noticed an increase in demand in Marylebone and Notting Hill from international investors taking advantage of the weak pound. But remember that spring is always the busiest market.”

Recent research from estate agent Benham & Reeves shows that the postcode of W1T — Marylebone, Fitzrovia and Soho — has seen the largest increase in demand with transactions up a staggering 315 per cent between 2017 and 2018, albeit from a very low base.

The average asking price for large family homes in London has fallen nearly eight per cent to £1,331,227 over the last 12 months, according to Rightmove.

The stamp duty burden, combined with prolonged Brexit uncertainty as the new deadline to leave the EU is pushed to the autumn, has quashed activity at the top of the mainstream housing market.

“There are more improvers than movers in the upper echelons as the cost of buying a new house, paying agent fees and tax makes buying that forever home an expensive endeavour,” says Marc Von Grundherr, managing director of estate agency Benham and Reeves.

“Homeowners are adding a basement or extension in order to maximise their space rather than buying that bigger aspirational property,” agrees Richard Angel, boss of interior design firm Angel O’Donnell.

The Rightmove data showed the greatest year-on-year fall in asking prices was at the “top of the market”, defined by the property portal as homes with five or more bedrooms.

Advertised values were also down in the first-time buyer sector too by 2.5 per cent from April 2018 to April 2019.