Average house prices in London fall -3.1% in August as sellers try to secure quick sales dragging down the UK property market.
The latest house price index from Rightmove shows London property values drop -3.1% or -£19,490 from an average of £628,695 last month to £609,205 in August.
London has dragged down the UK market reducing by -2.3% or -£7,218 to an average of £301,973 as sellers follow the peak summer trend of aggressive pricing to secure a quick sale.
The latest fall in house prices is good for first time buyers as they would require a lower deposit or smaller mortgage to get on the property ladder.
Buyer affordability stretched
House prices have increased by 32% since the market started its most recent cyclical upturn in 2010 stretching buyer affordability, says Miles Shipside Rightmove director.
First time buyers and home movers have been subject to tighter lending criteria brought in by the Mortgage Market Review four years ago to prevent the boom and bust cycle in the property market.
Political uncertainty with Brexit and the “beast from the east” weather have impacted house sales agreed currently down -3.5% for the year to date although there is usually an autumn upturn.
The following table from Rightmove shows the average property prices for Transport for London zones and annual changes to August 2018.
| London zones | Price Aug 2018 | Annual Change |
|---|---|---|
| Zone 1 | £1,266,350 | -3.6% |
| Zone 2 | £727,615 | -3.6% |
| Zone 3 | £576,709 | -3.6% |
| Zone 4 | £483,484 | -3.6% |
| Zone 5 | £476,047 | -3.6% |
| Zone 6 | £488,820 | -3.6% |
Over the year there has been a large decrease in the borough of Hammersmith & Fulham down by -6.0% or £55,319 with a property value of £886,970.
Further decreases are Hackney falling -4.6% with average house prices of £650,415, Wandsworth reducing -3.7% with prices of £791,347 and Lambeth lower by -3.4% and prices of £645,700.
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Lower house prices to continue
The average time to complete on a sale is 13 weeks according to Rightmove leaving little time for prospective buyers to be in a new home by the end of the year.
Housing stocks are higher than expected this month up 2.1% and with more choice for buyers homeowners need to increase their efforts and offer bigger discounts to sell quickly.
Homes in the capital for zone 1 have seen property values discounted by -4.7% or £62,453 last month and zone 2 by -3.3% or £24,838.
For buy-to-let landlords the lower house prices means they need a smaller deposit or mortgage and rental yields after interest payments would increase.
A recent poll by Reuters of 30 housing market specialists house prices in the capital will fall -1.6% this year and -0.1% next.
The fall in prices could mean remortgage buyers simply remain in their current home for the next few years and take advantage of attractive low interest mortgage deals.
A disorderly exit from the European Union would impact the capital as foreign investors would continue to stay away resulting in further falls particularly for high valued properties.
What are your next steps?
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Learn more by using the equity release calculator, mortgage monthly cost calculators, and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.
