March 2018 saw a drastic fall in London house prices, with the annualised rate of inflation dropping to minus 0.7%. According to official Land Registry figures, this is the sharpest decrease since 2009.
The drop in London house prices are a stark contrast to the rest of the UK, where the overall rate of house price inflation is at 4.2%. Scotland had the highest inflation increase of 6.7%.
London House Prices are Decreasing to Entice Home-buyers
According to London property experts, sellers are being forced to dramatically slash house prices in order to guarantee a sale. Potential home-buyers are aware that London house prices are particularly high, so to entice these buyers back, prices are being reduced to compete with the rest of the UK.
Jonathon Hopper of Garrington Property Finders goes as far to say that London is “paying a painfully high price for its stellar run of price rises”. In some areas of the capital, falling property prices show that a correction is now underway.
Significant Decrease
The ONS, who compiles the house price index, has stated that London house prices have been decreasing since the EU referendum in June 2016. This is the lowest annual growth in London since September 2009, which was minus 3.2% at the time. In mid-2016, there was an overall slowdown in London’s annual growth rate.
Figures from UK Finance revealed that home-buyer activity has changed in London. Over the past year, transaction activity has declined, showing that buyers are seeking accommodation elsewhere in response to the capital’s high prices. The number of first-time buyers fell by 3%.
The Rest of the UK is Thriving
Whilst London house prices are currently struggling, those further north are thriving. Prices in the capital are in negative growth territory, in contrast with the average prices further north appear more reasonable. Average house prices in Liverpool are up 12.5% in the same period. It is currently one of the strongest property markets in the UK. The south of England has often had a problem with affordability, whereas the north appears to offer better value; especially for families who are looking for a larger home.
