By Sharon Smyth
A new report has provided further signs that London’s long housing boom is coming to an end.
Prices across the English capital will start falling by the middle of this year, research company Hometrack has predicted, just two weeks after rival company Acadata said values are already dropping at the fastest pace since the depths of the recession.
The figures show that Brexit and tax changes, aimed at slowing the rampant real estate market in London and the south-east of England, are finally forcing vendors to cut asking prices.
“This is a result of tax changes impacting overseas and domestic investors and stretched affordability for owner-occupiers that has been compounded by Brexit uncertainty,” said Richard Donnell, insight director at Hometrack.
“Prices are next to follow,” he said.
House prices are already growing at their slowest pace in seven years across London, and fell in 42% of postcodes in February, the most since the global financial crisis, Hometrack said. Nationally, slower economic growth and faster inflation have weighed on the market, while the Bank of England is raising interest rates, adding to the pressure.
London is among the UK cities hit hardest by the price slides after values almost doubled over the past decade. Away from southern England, price gains remain robust, the report found.
Declines are most pronounced in high-priced inner-London boroughs such as the City of London financial district, Hometrack said. It now takes about 18 weeks to sell a home in inner London, almost double the time in outer boroughs.
Hometrack is slower than some other firms in showing a turn in the capital’s housing market because its London index includes a number of commuter towns, where prices aren’t falling as quickly. The researcher said it includes these to give a more accurate picture of London real estate trends.
The report also found that London home prices rose 1% year-on-year in February to £487,900 (€555,000); the smallest increase since August 2011 and down from 4.3% a year ago.
London sales volumes are down 17% since 2014.
City house-price inflation across the UK was 5.2%, year-on-year.
Prices are growing at more than 7% in Edinburgh, Liverpool, Leicester, Birmingham and Manchester, Bristol, Southampton and London are showing some of the slowest price growth, while values are falling in Cambridge and Aberdeen.