London property market: a summer review

News at Kings Group | 08/08/2017


As summer continues, Kings Group analyses the property market in London over the past few months, and how buyers, sellers and landlords have been affected.

 

June

 

This month saw the slowest quarterly growth in the capital since 2012 due to a lower demand for buy-to-let property and higher stamp duty, according to Nationwide.

Annual quarterly price growth in London fell from 5% in Q1 2017 to 1.2% between April and June. It’s likely this fall was caused by lower demand for buy-to-let properties as a response to higher stamp duty charges. Despite this, house prices in London are still 56% higher than they were in the pre-recession period in 2007, compared with 13% across the rest of the UK.

 

Also in June, average house prices rose on a monthly basis for the first time since February, pushing the average UK property price up to £211,301. Nationwide says that household finances are still suffering from a weaker backdrop – this is because inflation is surpassing wage growth. This could be down to the rise of employment or because there is limited choice for buyers with too few properties coming to the market.

July

 

It seems we’re still feeling the after-effects of the credit crunch 10 years later. Nationwide confirmed that the average house price went up by 0.3% last month, hitting a new peak of £211,671. Annually, though, the growth figure dropped to 2.9% from 3.1% last year.

 

Global property consultancy Savills believes that the global financial crisis – which began in August 2007 – will continue to loom over the sector for in the future. Research shows that the property market in London continues to work on a different level to the rest of the country, with average prices more than £250,000 higher in the capital.

 

Across the UK, the average first-time buyer deposit has doubled to £26,224, while in London it has quadrupled from £12,196 in 2007 to a whopping £97,513. Some 85% of these first-time buyer deposits have totalled £10.2 billion to the end of March. Savills estimates that at least £4 billion of this came from either government schemes like help to buy or ‘the bank of mum and dad’.

 

Currently, there are fewer prospective homeowners able to get their foot on the property ladder. One in 27 existing homeowners moved house this year, compared to one in 15 a decade ago. Meanwhile, last year, homes in the capital remained on the market for an average of 56.6 days, compared to an average of 72 days so far this year.

 

August


Despite political ambiguity and falling consumer incomes, house prises continue to rise thanks to a shortage of homes for sale. That said, weakening transactions have been at their lowest level for a total of eight months, while the number of mortgages approved has also fallen to a nine-month low.

 

Robert Gardner, chief economist at Nationwide, mentioned that annual price growth within the 3-6% range has been succeeding for the past two years. “A lack of homes on the market provides support. This pattern looks set to be maintained in the near term,” he said.

 

A shortage of homes being built and homes for sale is stopping prices from dropping, although household spending is likely to weaken in the following quarters. This will likely drag housing market activity and house price growth, which is predicted to slow to about 2% this year from 4.5% in 2016.

 

Surveys show a decline in fresh properties coming on the market. With household budgets under pressure and consumers failing to keep up with living costs, Nationwide is predicting ‘subdued’ housing market activity.

 

All these factors combine to suggest that despite an uncertain landscape, it’s still a good time to sell a property in London as house prices continue to rise and demand continues to outweigh supply.

 

If you would like any guidance on buying or selling a property in North London, East London, Hertfordshire or Essex, contact your local Kings Group branch today.

 

 

You can find out how much your home could be worth on the London property market by requesting an instant online valuation.