Greater London saw the sharpest annual decline in house price growth of all the UK regions, according to data published this week by Lloyds.
Average London house prices dropped by more than 2% from last year to £531,548. Experts say buyers are putting off purchases due to increasingly unaffordable mortgage rates and expectations that the Bank of England will raise interest rates in November.
Kal Choudry, an area director at estate agents Nested Rotherhithe, believes London house prices are falling because buyers are struggling to afford homes amid weak wage growth and concerns over the economy.
He said: “On top of mortgage rates being high, there are also really high product fees. For first time-buyers who are already shelling out their life savings on a deposit and stamp duty, to be hit with an extra two, three grand is a lot of money.
“London buyers always want to buy a property knowing that the capital appreciation will be there, and they just aren’t getting that at the moment.
“Owners that are really needing to sell quickly will reduce their offers.”
According to the latest ONS House Price data, the five London boroughs with the steepest year-on-year decline in average house prices were: Westminster (20.7%), Tower Hamlets (14.4%), Kensington and Chelsea (14.1%), Camden (10.1%) and Hammersmith and Fulham (9%).
Michael Robinson, a director at Tuckerman Residential estate agents in Pimlico and Westminster, said: “Mortgage rates being where they are at the moment is causing first-time buyers to pause their searches.
“There is also a knock-on effect from people who bought five to 10 years ago finding that the value of their property isn’t what they want, and so are not wanting to sell for less than they bought for, so the whole market is stuck.”
Despite falling prices in London, the rest of the UK saw modest house price growth over the same yearly time period. The North continued to lead the way in England, with the North East and North West recording increases in house prices of 2.4% and 1.9% respectively.
Featured image credit: South West Londoner Media Library
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