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London house prices: Prime postcodes dip as Brexit uncertainty weighs on market

House prices in London’s most expensive neighbourhoods tumbled in the run-up to Christmas, continuing on a downward trend in the wake of uncertainty from both buyers and sellers.

According to new data from Lon Res, prime property prices in the fourth quarter of 2018 fell 5.7 per cent when compared with the same period in the previous year.

More than 50 per cent of prime properties on the market underwent a price reduction before being sold, with homeowners lowering the value of their houses in a bid to lure in buyers.

In a fresh sign of the subdued activity within some of the capital’s most expensive postcodes, Lon Res also found that £2.9bn of housing stock was sold in prime central London last year, sliding from £3.5bn in the year before.

“In an uncertain market the response by both buyers and sellers in prime London has been to hunker down and observe rather than participate. This is impacting on both transaction levels and prices. However for those willing to buy, there are opportunities to be had and purchasers are negotiating accordingly,” said Marcus Dixon, head of research at Lon Res.

Dixon added: “The prime rental market continues to benefit as would-be buyers become tenants. Despite fewer new lets agreed, owing to an increase in renewals, stock levels are low and competition among prospective tenants is leading to increases in achieved rents in most central London areas. Fewer landlords are needing to reduce their asking prices and discounts have fallen back.”

According to a survey carried out as part of the Lon Res research, some 69 per cent of respondents reported that Brexit remained the biggest drag to demand in the year ahead.

The news comes despite recent data showing that wealthy buyers have been on a spending spree for multi-million pound trophy houses during the last year, with demand for London’s ‘super prime’ residences bucking a wider slowdown in the capital’s property market.

Despite political uncertainty ahead of Britain’s imminent departure from the EU and plans for a new stamp duty on international buyers, activity in London’s ultra high end housing scene has been heating up in the wake of price falls and a drop in the pound that has lured in foreign investment.

Source: City AM

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London house prices dip over 2018

London house prices dipped in 2018, with uncertainty looming large over the capital in spite of double-digit growth across many of the UK’s other major cities.

Property prices in London tumbled 0.2 per cent last year, according to new data which underlines fears of a slowdown in activity across parts of the capital’s housing market over recent months.

However, other major UK cities have shown more resilience despite confidence hitting the capital in the wake of the Brexit vote, with Birmingham and Manchester seeing prices rise by 16 per cent and 15 per cent respectively since June 2016.

“Weaker growth in London, Cambridge and Aberdeen has been a large drag on the headline rate of house price growth across the UK cities index over the last year. House prices in London have been falling for almost 12 months while the rate of growth has slowed across cities in southern England, a result of growing affordability pressures, higher transaction costs and increased uncertainty,” said Richard Donnell, research and insight director at Zoopla.

Donnell added: “The strongest performing cities are outside south eastern England where affordability remains attractive and employment levels are rising. We expect current trends in price growth to continue across the rest of this year, with prices rising in line with earnings for much of the UK but lower growth and some house prices falls in London and the South.”

Evidence of growth in areas outside of London comes on the same day as the Mortgage Advice Bureau said that there had been a “positive end to 2018 as the market is still busy in the run-up to Christmas”, with areas such as Yorkshire and the Humber, as well as the East and West Midlands, exceeding seasonal expectations.

Source: City AM

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London house prices fell 1.5 per cent in December as Brexit bites

The average asking price for London houses fell 1.5 per cent in December compared to the previous month as Brexit uncertainty continued to dampen the capital’s property market, according to figures released today.

Figures from the latest Rightmove House Price Index showed the average asking price for a London home is now just under £594,000. Nationally, asking prices increased by an average of 0.4 per cent in December.

“Given the current market backdrop and ongoing political turmoil, it’s not surprising that the more challenging conditions in London and its nearby regions mean that they appear to have had a slower start to the year,” said Miles Shipside, Rightmove director and housing market analyst.

The average time taken to sell a home in London in December was 82 days, up from 78 days at the same time last year. London houses took almost two weeks longer to sell than the national average of 70 days.

Brian Murphy, head of lending for Mortgage Advice Bureau said: “It’s no surprise that today’s report suggests that the northern regions of the UK appear to have had a brisker start to 2019 than London and the south, as this is a continuation of the disaggregated picture we saw last year.”

Despite the sluggish market, Rightmove reported that visits to its website in the first two weeks of 2019 were up five per cent on last year.

Murphy said that “regardless of the ongoing Brexit-driven headlines, this perhaps highlights that regardless of geopolitics, people both need and want to get on with their lives”.

Source: City AM

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London ends the year with negative growth for the second time in 23 years

House prices in the capital have fallen by 0.1% over the past 12 months, making it only the second time in 23 years that London has ended the year in negative growth, The Hometrack UK Cities House Price Index has found.

Recent house price falls are doing little to materially change the affordability picture in London. The house price to earnings ratio peaked at 14x in 2016 and has started to fall but remains stretched at 13.3x.

Richard Donnell, insight director, Hometrack said: “The diversity of London’s housing markets is shown by the clear divide between low house price growth in outer London and commuter areas and nominal price falls concentrated in high value, inner areas of the capital. In 2019, house prices we expect prices to continue to fall most in central areas of London.

“Our projection for a 2% fall in overall London prices will reduce the price to earnings ratio to 12.8x, in line with levels last recorded in mid-2015.”

Prices are falling across two thirds of local authority areas across London City by up to -3.5% in Camden, while average values are rising in a third of markets by up to 2% in Barking and Dagenham.

House price inflation has slowed to 2.6%, the slowest rate of annual growth since 2012, due to ongoing price falls in London and a sustained slowdown across cities in Southern England.

Edinburgh is currently the fastest growing city (6.6%) with price rises in Manchester and Birmingham also running at above 6%. However, only four cities are registering higher levels of house price growth than this time a year ago – Manchester, Liverpool, Cardiff and Newcastle.

The cities that have the seen the greatest slowdown are all located in the South of England; Bournemouth, Portsmouth and Bristol.

Affordability pressures have increased in these cities over the past year and they now record the highest house price to earnings ratios outside of London, Oxford and Cambridge.

Over the course of 2019 Hometrack expects UK city house prices to rise by 2%, as above average growth in large regional cities offsets price falls in London.

Prices in London are forecast to register house price falls of up to 2%, while in more affordable cities such as Liverpool and Glasgow price could rise by another 5% next year.

Donnell added: “Outside of London and the South affordability levels in regional cities remain attractive but this is changing.

“House price growth has run well ahead of earnings growth for the last five years and together with small increases in mortgage rates, as well as growing economic uncertainty, the speed at which households bid up the cost of housing is reducing.

“The fundamentals of housing affordability will shape the prospects for city house prices in 2019. This is already the case with flat to falling prices in the most unaffordable cities and above average growth in the more affordable areas.

“Ultimately, the speed at which affordability translates into price changes depends on economic factors, changes to mortgage rates and household sentiment. Brexit is the greatest driver of uncertainty in the near term and the prospects are for a slow start for the housing market in 2019.”

Source: Mortgage Introducer

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London house prices slump as Brexit stagnation spreads to suburbs

London house prices fell in October as slowdown in the capital dragged down UK property price growth to its lowest level in five years.

House prices in London fell 0.3 per cent in October, taking the annual price fall in the capital to 1.7 per cent, according to data released today by the Office for National Statistics (ONS).

The sluggish figures dragged the average price rise across the UK to 2.7 per cent, the lowest annual rate since July 2013.

Uncertainty in the run-up to Brexit has led to a stagnation in the capital’s property market, with house prices falling each month since July this year. The latest fall takes the average London property value to £473,609.

The ONS said falling house prices have mainly been driven by inner London boroughs, where annual growth has been negative since the beginning of the year.

But prices in outer London fell by 0.2 per cent in October, the first annual fall since 2011, suggesting the slump has now spread into the suburbs.

Chris Sykes, mortgage analyst at Private Finance, said: “While the rest of the UK may be enjoying positive growth for now, it’s important to remember the wider UK property market often takes its lead from London.

“With Brexit uncertainty likely to continue well beyond 29 March, UK house prices could be set to weaken nationwide in 2019.”

ONS figures also revealed UK inflation fell to a 20 month low in November, rising just 2.3 per cent. It said the slowdown was fuelled by a drop in petrol prices ahead of Christmas.

Jonathan Samuels, chief executive of Octane Capital, said: “The million dollar question at present is whether the property market slowdown turns into a property market meltdown.

“With Brexit day approaching, the hope is that strong employment levels, falling inflation, a lack of supply and continued low borrowing rates will prevent a collapse in prices.”

Source: City AM

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London house price boom over, at least for now

The days of London house price rises hugely outpacing inflation won’t be returning anytime soon, even if Britain and the EU strike a Brexit deal, the vast majority of economists and analysts polled by Reuters said.

Property values in the capital, long a haven for foreign investors, more than tripled in the last 20 years, but demand and turnover have crumbled since the June 2016 vote to leave the European Union and property taxes were raised.

According to the Nov 13-22 Reuters poll, London house prices will fall 1.7 percent this year and another 0.3 percent in 2019. Asking prices in London fell 1.7 percent this month from October, according to property website Rightmove.

Sterling, the stock market and businesses have had a turbulent few years since Britons narrowly voted to end their 45-year membership of the EU.

With just over four months left until Brexit day, Prime Minister Theresa May faces opposition from lawmakers in all parties to her negotiated withdrawal deal, fuelling fears the country may leave without one.

As that risk appeared to grow on Nov. 15, shares in housebuilders Persimmon (PSN.L), Taylor Wimpey (TW.L) and Berkeley Group (BKGH.L) fell between 6 and 7 percent in their worst daily performance since the referendum.

“Things are starting to look a bit bleak. Uncertainty is about the only thing we can be certain about over the next two years,” said independent buying agent Henry Pryor.

Asked if there would be a return to strong turnover and above-inflation house price growth in London and the South East if a Brexit deal was struck, 14 of 17 respondents said no. Two said it would happen regardless and one said it depended on the deal.

But Brexit is not the only factor holding back prices – a sharp increase in Stamp Duty Land Tax, paid when buying a house, has particularly affected the capital where houses are much more expensive than the rest of the country.

“The high rates of SDLT will continue to stifle transaction volumes, especially in expensive price areas like London and the South East,” said Ray Boulger, a senior manager at mortgage broker John Charcol.

After next year’s modest dip London prices will rise 1.5 percent in 2020, the poll found. A separate Reuters survey said overall inflation would be 2.0 percent that year. [ECILT/GB]

Graphic on UK and London house prices forecast: tmsnrt.rs/2Q89SKn?eikon=true

Graphic on UK house price-to-earnings ratio: tmsnrt.rs/2R1jZgW

Graphic on outlook for London’s housing market: tmsnrt.rs/2DCgt8Z?eikon=true

LITTLE CHANCE OF CORRECTION

When asked about the probability of a significant correction in London’s housing market by end-2019 the median forecast was only 20 percent, significantly down from the 29 percent given in August. That may be partly explained by the view that prices are already falling.

But not everyone was gloomy about the capital’s prospects.

“London demand is starting to poke its head above the stamp duty-laden parapet again,” said Russell Quirk, chief executive of online estate agent eMoov.

“History tells us that you can’t subdue London long term and therefore it’s clear that the current downturn in the capital’s volumes and values is temporary.”

Nationally, house prices are forecast to rise 2.0 percent this year, 1.8 percent year and 2.0 percent again in 2020, the poll found.

Those moderate gains are below expectations for wage increases and will likely cheer first-time buyers who are struggling to get on the property ladder.

When asked to rate the level of London house prices on a scale of 1 to 10, where one is extremely cheap and 10 extremely expensive, the median response was 8. Nationally they were rated 7, where it has been for a couple of years.

While borrowing costs are currently low, the Bank of England is forecast to raise rates again after Brexit. But the new level of Bank Rate will still be historically low at 1.0 percent and it is not expected to rise to 1.25 percent until early 2020.

Source: UK Reuters

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London house prices: Homes in the capital lose value despite the UK’s resilient property market

London house prices fell 0.3 per cent in the year to September, according to Office for National Statistics (ONS) data released today.

Growth in the capital lagged far behind the UK-wide average, which was 3.5 per cent, a small increase from 3.1 per cent last month. The growth puts the average house price across the country at £232,554.

But homes in the capital did not decline as badly as they did in August, when prices fell by 0.6 per cent.

The figures from the ONS and Land Registry show the disparity between the London property market, which has been in decline since March, and other parts of the UK. Growth was fastest in the West Midlands, where house prices increased 6.1 per cent.

The decline in growth reflects uncertainty around Brexit, with London taking the brunt of lower buyer confidence, according to property experts.

Richard Snook, senior economist at PwC, said: “London remains the biggest regional story as the price decline continues, albeit at a modest rate.

“London is one of the most internationally dependent parts of the UK, due to economic integration with Europe and the high share of foreign citizens in the labour market.”

“Therefore, the greatest impact of Brexit-related uncertainty was always going to be felt in the capital,” he added.

In its November inflation report the Bank of England suggested the London market has been disproportionately affected by regulatory and tax changes and lower net migration from the EU.

But the London market has also been impacted by rapidly rising house prices in the capital, which have left many potential buyers unable to afford a home.

At £482,000, the average house price in London is more than double the average of the rest of the country. The most expensive area is Kensington and Chelsea, where the average house costs just under £1.5m.

Head of residential property at Sotheby’s International Realty, Guy Bradshaw, blamed “punitive” stamp duty costs.

“When will the government start listening to the industry and stop ignoring these figures? London estate agents have been banging the drum for a stamp duty reform for years and today’s figures clearly show a suffering market,” he said.

A breakdown of growth by borough shows the fall mainly impacts central London properties, with outer London boroughs such as Brent and Redbridge seeing a rise in house prices.

North London estate agent Jeremy Leaf said: “Once again we are seeing prices softening but no dramatic change, underpinned by low mortgage rates and supply.

“The price falls in London are masking a more resilient picture elsewhere in the country, underlining how misleading it can be to judge the market as a whole by what is happening in one region.”

Source: City A.M.

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London house prices set to slide as caution lingers in the UK property market

Fears of flat activity in London’s housing market were underlined by a new closely-followed survey this morning, which suggested property prices will continue to sink as buyer caution looms over the capital.

According to data released today from the Royal Institution of Chartered Surveyors, 41 per cent more respondents have predicted a further fall rather than a rise in house prices over the next three months.

However, some 47 per cent more respondents also said they witnessed a drop as opposed to a bump in London property prices during October, improving from the same month last year when 67 per cent more respondents reported weakened prices.

“The London numbers remain disappointing with current activity subdued and the forward-looking indicators providing little prospect of an improvement anytime soon. Ongoing uncertainty about what a Brexit deal, or a no-deal outcome, might mean for the capital’s economy is clearly weighing on sentiment at the present time,” according to Rics chief economist Simon Rubinsohn.

He added: “But it is not the only issue holding back potential purchasers. At the higher end, stamp duty land tax remains a key impediment while elsewhere, affordability/ deposit requirements present a greater challenge. Unfortunately, I struggle to see where relief for either of these obstacles likely to come from.

The news comes a day after the Halifax house price index showed that property values in the UK slowed to their lowest annual rate of growth in more than five years last month.

Brian Murphy, head of lending for Mortgage Advice Bureau, said: “What would appear to be consistent.. is the continuing lack of properties available as even in those areas where demand is still significant and prices are still on the ascendant, the numbers of new listings over the last month would appear to have remained subdued. This may well assist with underpinning current values in some areas where demand is significant, although in others a lack of homes being listed for sale may add to the current market malaise as buyers can’t find what they are looking for, leading to a stagnating environment.”

Source: City A.M.

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London house prices: landlord exodus opens path for first-time buyers

An exodus of buy-to-let landlords in London is opening up a unique opportunity for first-time buyers, property website Rightmove has suggested.

House price movements in the capital are at their most subdued in eight years, with prices for one and two bedroom properties falling marginally over the past year.

This is the point where aspiring first-time buyers typically have competed with investors, but a 3% rise in stamp duty for buy-to-let and second home properties has put off many would-be landlords, clearing the way for new buyers, The Times reports.

Miles Shipside, a Rightmove housing market analyst, said: “Government policy has sought to reduce [buy-to-let investor] activity and so tilt the balance back towards first-time buyers.”

He added that “landlords are clearly buying far fewer properties and that leaves a gap in the market for first-time buyers”.

While landlords were hit with the 3% stamp duty surcharge from April 2016, first-time buyers were “effectively awarded stamp-duty-free status in November 2017”, said Shipside.

The fall in prices at the bottom of the market over the same period provides an opportunity for aspiring homeowners to “negotiate harder”, says Shipside.

The muted buy-to-let sector “is also dampening demand and stifling the usual autumnal hike in asking prices”, says Homes and Property.

The Rightmove Index has found the autumn selling season, which sees vendors launch properties that have been held back over the summer, has started with a whimper as asking prices in central London fell 1.1% to £625,000 this October compared to the same month last year.

Property analysts believe this slowdown is due to deepening political uncertainty in the build-up to the UK leaving the European Union next March and the gap between house prices and household incomes in the capital, with first-time buyers still struggling to save for a deposit.

North London estate agent and former Rics residential chairman Jeremy Leaf told Mortgage Strategy: “Buyers and sellers seem worried about the two ‘B’s – not only about the impact of a good, bad or indifferent Brexit deal but also the looming Budget at the end of the month.”

All eyes now turn to Philip Hammond, with the chancellor rumoured to be looking to encourage more landlords to sell to long-term tenants for a capital gains tax relief.

This could provide a win-win situation for both investors and first-time buyers, and further boost the number of one and two bedroom properties on the market.

Source: The Week

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Four London boroughs set for rocketing house prices amid mass-regeneration

House prices in London are set to grow by an average of 12 per cent over the next five years, according to research which suggests London’s property slump might not be as severe as many in the industry had feared.

Among the London boroughs pipped to undergo the fastest growth are Hackney, Camden, Tower Hamlets, and Haringey, according to new research from real estate advisor CBRE.

The report also found that Harrow experienced the strongest house price growth over the last 12 months, rising 14 per cent compared with the London average of two per cent, the figures revealed.

However, over the last five years the area with the strongest growth has been Waltham Forest, which saw an 83 per cent increase in the price of property; almost double the London average.

“The figures in this report suggest that London’s population will grow 12 per cent over the next decade, as people continue to flock to the one of the world’s top cities for education, business and heritage,” said Jennet Siebrits, head of residential research at CBRE UK.

Siebrits added: “We estimate that nearly 65,000 new homes are currently under construction and it is crucial that this rate continues if we are to safeguard the future of London as a thriving home for people from all over the world.”

According to the report, London’s growth has been “encouraged by the mass-regeneration of previously unloved areas of the capital. It’s encouraging to see much more thought being given to the role that safe roads, open spaces and green areas play in people’s lives when regeneration projects are planned”.

The news comes despite a swathe of recent forecasts predicting London could suffer a sustained decline in house prices up until 2020.

A YouGov survey last month suggested public expectations for house prices over the next year have hit their lowest level in 12 months, while a recent Reuters poll of 30 housing market specialists estimated that house prices in London are set to tumble as much as 1.6 per cent by the end of 2018 and a further 0.1 per cent next year.

Caution has lingered in the run up to Britain’s discussions with Brussels over leaving the EU, with activity slowing down in many parts of London as homeowners wait to see what type of deal is achieved from the Brexit negotiations.

Yesterday’s Office for National Statistics data showed that London house prices plunged to their lowest rate of growth in nearly a decade in July, falling 0.7 per cent over the 12-month period.

Source: City A.M.