London slowdown bottoms out, but only low price growth in long-term

Property consultancy Hometrack says London’s 12 month market slowdown has bottomed out with the annual growth rate rising to 2.8 per cent -  up from 2.3 per cent last month. 

There have been consistent month on month price increases averaging 0.5 per cent across London for the last 6 months and average prices are now 1.4 per cent higher over the last 3 months in the capital, says Hometrack, which puts the stabilisation down to lower transaction volumes and an absence of forced sellers. 

Housing turnover across London has fallen 17 per cent since 2015.

Meanwhile annual house price growth across major UK cities as a whole stands at 5.3 per cent now compared to 7.4 per cent a year ago.

Growth has picked up in recent months on faster rate of monthly price increases and continues to remain robust in regional cities. Birmingham (8.0 per cent), Manchester (7.1 per cent) and Nottingham (6.9 per cent) are the UK’s fastest growing cities this month.

Aberdeen remains the only UK city in the top 20 list to suffer house price falls (down three per cent). Average house prices in the city are now 16 per cent lower than they were in December 2014 as the fall in the oil price impacted the local economy.

Aberdeen’s housing market serves as a warning to the rest of the UK about the potential for macro-economic factors to have a negative impact on an over exposed local economy, says Hometrack.

“The London housing market has registered a rapid deceleration in house price growth since the start of 2016 as affordability pressures impact demand and the Brexit vote adversely affected housing market sentiment. Turnover is down 15 per cent from the recent high recorded in 2015 and sellers are slow to accept downward adjustments in prices in the face of weaker, price sensitive demand” says Hometrack’s Richard Donnell.

“There remains a clear divide between the prospects for house price growth in regional cities, where affordability levels are attractive, and the prospects for house price growth in London and other high value cities in southern England. We expect house price growth in regional cities to be sustained at current levels for the rest of 2017 whereas London is set for a sustained period of low nominal price growth and lower sales volumes” he adds.