London house prices: average asking prices in the capital fall at biggest rate in eight years while UK prices hit record high

By Prudence Ivey

The drop in prices is led by more expensive homes in central London, but there's some hope for first-time buyers too.

London house prices have experienced their biggest annual drop in nearly eight years, as sellers of more expensive homes in desirable inner London areas adjust their expectations following years of spiralling price rises.

While house prices in the rest of the country hit a new record high, Greater London saw asking prices fall by 1.5 per cent.

The drop – which equates to an average of £9,400 – was mainly due to continuing dips across prime central London, but there are signs that the price pressure for first-time buyers may also be easing, according to the report released by Rightmove today.

The biggest fall was recorded for large family homes with five or more bedrooms, where average prices are now £1.49-million, 7.3 per cent lower than in April 2016. But Rightmove data found that inner London was also affected, with asking prices dropping in such popular areas as Wandsworth, Islington, Lambeth and Southwark, where average prices range from £630,000 to £800,000.

“Sellers in the capital are having to trim their price aspirations to try to tempt spring buyers to buy their property instead of one down the road,” said Rightmove’s Miles Shipside.

Annual house price changes in London

Source: London Evening Standard graphic:<br> Rightmove House Price Index for April 2017 Created with Datawrapper 

“While the year-on-year fall of 1.5 per cent is the worst for nearly eight years, it needs to be put into the context that overall prices are still an average of only £10,000 below their all-time high. Demand continues to be strong, but at the right price for the right property.”


Asking prices in inner London dropped by an average of £35,500 year-on-year, equivalent to the Stamp Duty payable on an average-priced £803,000 property in the area.

HOPE FOR FIRST-TIME BUYERS

First-time buyer properties in London rose 0.5 per cent compared to April 2016 to £483,592.

While this is still well above widely accepted affordability calculations, the slowing pace of price growth for two-bedroom and smaller properties will offer a degree of respite to buyers whose ability to save towards a deposit has been dramatically outpaced by rising prices.

Although prices recorded an overall annual fall in the capital, the average asking price in outer London went up slightly to £526,000.

BUY-TO-LET EASES IN CHEAPEST BOROUGHS

However, even some of the cheapest outer boroughs experienced only moderate price rises, with some seeing average prices fall slightly, thanks to declining interest from buy-to-let investors after last April’s Stamp Duty hike on second homes.

In Barking and Dagenham, still London’s cheapest local authority, prices rose by only half a per cent to £304,000, while in the Olympic borough of Newham, home to popular first-time buyer areas including Forest Gate, East Ham and Stratford, they fell 1.1 per cent.

“We’re finding that most of the properties we’re selling are to first-time buyers or upsizers coming from areas like Camden, Islington, Hackney or Bethnal Green. They can sell their flats and buy a Victorian terraced house here for £400,000,” says Rashad Cheema, manager of Spencers estate agent in Newham.

“Investors have eased off because of the Stamp Duty hikes last April. About 90 per cent of our buyers are buy-to-live now and most of those are first-time buyers or upsizers. Before April 2016 at least 60 per cent of our buyers were investing in buy-to-let.”

http://www.homesandproperty.co.uk/property-news/london-house-prices-asking-prices-in-the-capital-fall-at-biggest-rate-in-eight-years-a109891.html