House prices in London posted their largest yearly fall in almost six years in February according to the property website Rightmove. The figures represent the first annual decline in London house prices since April 2011. It is believed that high asking prices and fears over Brexit have been putting off buyers.
While February asking prices are up compared with January, the 2.6 per cent increase is the weakest monthly gain for a February since 2009 during the height of global financial crisis.
Across the capital, house prices fell by 0.4 per cent compared with last year with the average property in London now costing £641,116. Reversing the trend of a stronger performance compared with the rest of the UK, the London housing market under-performed the rest of the country during 2016. The latest sign of housing market weakness continues the trend set in the second half of last year. In addition to Brexit fears, tax increases on investors in the early part of the year have been suggested as factors in reducing demand for prime London real estate.
Nationally annual house price growth slowed to the weakest in almost four years this February with average property asking prices rising 2 per cent to £306,231. This represents the weakest February property performance since 2009 well below the 5 percent average gain for the month over the past seven years.
The picture across London as a whole is more mixed. Central London led the price slowdown with asking prices falling 2.1 per cent compared with February a year earlier whereas Outer London suburbs registered a price increase of 1.4 per cent. However, comparing the relative performance between January and February, inner boroughs outperformed as owners of more expensive homes boosted the average by listing their properties for sale after the Christmas break.
Rightmove claims that potential buyers may also have become price-sensitive as inflation erodes real incomes. The company’s director miles Shipside added: “Perhaps we’re approaching the territory where many buyers are unable or unwilling to pay what sellers are asking, given the negative combination of rises in the cost of living, tighter lending criteria, and a dose of Brexit uncertainty. Values have boomed since 2013, so it’s not surprising that upwards price pressure is running on tired legs.”