London’s house prices are continuing to slide, with average asking prices down just over £11,000 year on year. One and two bedroom properties have seen the largest price drops since July 2017, providing some much-needed good news for first time buyers. Starter-home prices have fallen 3.5 per cent (or almost £18,000) to an average £486,000. Meanwhile the price of three- to four-bedroom houses has remained relatively unchanged at just over £700,000.
But larger and detached homes have dropped by 2.7 per cent — although these “top of the ladder” properties still cost an average of almost £1.5m.
“It’s been well-documented that the top end of the London market has been struggling for the past couple of years, but … asking prices in the lowest priced sector are now experiencing a larger percentage fall than these high-end properties.” Combined with Stamp Duty relief on properties worth less than £500,000 and Government initiatives like Help to Buy London, the news will bring relief to the 47 per cent of millennial’s who recently told Royal Bank of Scotland researchers they had given up hope of ever owning a home.
According to the latest analysis the number of first time buyers in the UK has fallen by almost a quarter since 1994 and the number of lone first time buyers have seen a more significant 45 per cent decrease. The key reason for price drops in the capital’s starter home sector is a collapse in the buy to let sector. Tax changes over the past two years have made owning a rental property a far less lucrative enterprise. The number of landlords snapping up flats in the capital has collapsed as a result, leaving the way clear for first time buyers. Jonathan Samuels, chief executive officer of property lender Octane Capital, described the situation as a “sea change” in the property market. ‘Amateur landlords are fast becoming an anachronism,’ he said.
Of course London’s prices are still prohibitively high for hundreds of thousands of would-be homeowners. John Phillips, group operations director at Spicerhaart and Just Mortgages, called for the Government to overhaul the tax system to make moving onto and up the ladder easier. “Stamp Duty is the biggest barrier to a freer housing market, and if it was cut altogether, or at least cut significantly, it would have a hugely positive impact, not just on the housing market, but the economy as a whole,” he said.
Around London the market is very much a game of two halves. Around half the boroughs have experienced price falls during the past 12 months, while the rest are still in the black (just). The areas where prices are on the up are a mix of prime central London locations led by Kensington and Chelsea, up 4.1 per cent to an average of £1.7m, and far flung suburbs like Sutton, up 3.9 per cent to an average of £485,000. At the bottom of the table the three worst performers are Hackney, down 3.5 per cent to an average of £649,000, Ealing, down 3.4 per cent to an average of £557,000, and Hammersmith & Fulham, down 3.3 per cent to £913,000.
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