Brexit hitting Greater London property hardest
Asking prices in the Greater London property market fell by 1.2% between July and August suggesting the decision to leave the EU is having more of an impact on the city than other parts of the UK, according to Home.co.uk.
This is the third monthly fall in a row, with Greater London’s average asking prices falling by 1.1% between June and July and by 0.4% the previous month.
The annual rate of price inflation for Greater London property now stands at just 2.5% and falling. The firm is predicting this will fall to 0% within a mere two months, highlighting the very real danger that negative equity is just around the corner.
Foreign buyers who purchased a property in London within the last 12 months are probably already in negative equity, the analysis suggests and it points out that in terms of Euros, Greater London home prices have shown a dismal performance over the last year, with values in the region dropping 11% since May and 17% since November last year.
However, there is a potential upside that European buyers may be attracted back to the market but house prices and sterling will need to stabilise for that to occur.
Housing supply figures from Home.co.uk strongly suggest further price falls are inevitable in the capital as Greater London vendors overload the property market in the aftermath of June’s Brexit vote.
Between July 2016 and July 2015 new listings in London increased by 27%, compared to a year on year rise of 6% the month before. The typical time on the market has also risen sharply from 68 days in July to 73 days in August, forcing vendors to further cut prices in a property market that was already in a precarious position through buy to let taxation changes and warnings about overvaluation.
The South East of England, where in August asking prices fell by 0.2% for the second month in a row, is showing signs of becoming the next property price slump hot spot, as panic selling in the capital spreads out into the capital’s commuter belt and beyond, the report also suggests.
Between July 2015 and July 2016 the supply of property for sale in this region rose by 19% and the firm is predicting that the South East’s typical time on the market of 63 days is likely to rise markedly due to the boost in supply in this region.
“It is clear that the referendum result certainly unnerved many investors. We will be keeping a particularly close eye on the London market over the next month, watching whether or not the surge in new listings becomes a stampede,” said Doug Shephard, director at Home.co.uk.
“This would inevitably lead to a home price crash in the region and stress mortgage lenders to the limit or beyond. Property investors would be well advised to weather the storm and not join a rush to market,” he added.