London house prices are falling at their fastest pace since the financial crisis, confirming the British capital as the worst-performing part of a slowing market.
Early data point to home values in London declining 2.7 percent in the year through September, the most since 2009, according to Acadata and LSL property Services. A 0.7 percent fall in August marked the first negative reading since 2011 as sellers in some of the city’s most expensive boroughs, including Westminster, Wandsworth and Hammersmith, were forced to cut prices.
Outside of London and southeast England, the market appeared more buoyant, with prices on average rising in September by more than 3 per cent on the year, though the pace of growth has been slowing for months.
In London, values fell for a sixth consecutive month. If the provisional estimates are confirmed, the average price of a home in the capital was less than £582,000 ($983,000), the lowest since the end of 2015.
The downbeat picture was confirmed in a separate report from Rightmove Plc, which said asking prices in London fell an annual 2.5 percent in October. While they rose 3.1 percent on the month, driven by owners of more expensive properties, achieving these prices is far from assured as buyers now have more choice, according to Rightmove director Miles Shipside.
Values at the top end of the market have come under the most pressure, with prices falling in almost half of London’s 33 boroughs in the year through August, according to Acadata. It illustrates the toll being taken by Brexit uncertainty, higher property taxes for landlords and the prospect of the Bank of England raising interest rates for the first time in a decade.
The fall will be welcome news to people struggling to get onto the housing ladder after years of rocketing prices. Affordability is a hot political topic in the U.K. and Prime Minister Theresa May’s government announced an extension of its “Help to Buy” mortgage-assistance program earlier this month, though economists questioned its effectiveness in London where house prices are still double the national average and 10 times the earnings of a first-time buyer.
“It’s stimulative on the margin in London but not enough to make much difference there,” said Philip Rush, an economist at Heteronomics. “It’s more supportive elsewhere in the country where prices are lower, but also growing better anyway.”
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Separately, a record number of London homes under construction remain unsold. Almost 13,000 of the homes have yet to find a buyer compared with about 12,600 at the end of last year, according to a report by Molior London seen by Bloomberg News. Still, sales of new and under-construction London homes jumped 24 percent in the third quarter from a year earlier, the data show.