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s interest rates rise and the threat of imminent recession looming, average asking prices in London dropped by some £23,000 in the last month — the first fall of the year.
According to new research from Rightmove prices fell by 3.4 per cent in the past month, to an average of £668,587. This is still 5.2 per cent higher than in August 2021 but represents the biggest tumble of any UK region.
Prices in the south east fell 1.7 per cent last month, to an average of £483,842, which is eight per cent higher than in August 2021.
Across the capital the biggest price falls were mostly felt in leafy, affluent suburban boroughs, led by Barnet (down 4.4 per cent to an average £716,000), Merton, down 3.6 per cent to an average £731,000), and Richmond upon Thames (down 2.5 per cent to an average £936,000).
Prices also slipped in Westminster (down 2.6 per cent to an average £1.47m).
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Islington saw the strongest performance, with asking prices up 1.3 per cent, to an average £790,000.
Tim Bannister, Rightmove’s property director, said today’s figures could partly be explained by the summer holidays — prices tend to fall in August because so many potential buyers and sellers are away.
And agents report that some new sellers are pricing competitively in an attempt to find a buyer and move home before Christmas.
“A drop in asking prices is to be expected this month, as the market returns towards normal seasonal patterns after a frenzied two years, and many would-be home movers become distracted by the summer holidays,” he said. “Sellers who want or need to move quickly at this time of year tend to price competitively in order to find a suitable buyer fast, with some hoping to complete their move in time to enjoy Christmas in a new home.”
In north London Jeremy Leaf, principal of Jeremy Leaf & Co estate agents, agreed demand has softened over the past few months. But he believes sale prices will remain stable. “Lack of choice, low unemployment and increasing rents are continuing to support demand,” he said. “No significant change in property prices is expected at this stage despite increasing concerns about the rising cost of living and interest rates.”
And despite August’s price blip Bannister expects asking prices to go back up again over autumn, and end the year seven per cent higher than in January despite the worsening economic picture.
“Right now, the mismatch between supply and demand is still the biggest factor influencing asking prices outside of seasonal trends,” he said. “Although demand continues to soften, and supply constraints are improving, there is still a massive imbalance.
“Buyer enquiries to agents do not appear to have been particularly dented by the most recent interest rate rise, suggesting that many buyers are still committed to moving, and incorporating rate rises into their financial planning.”
Earlier this month Savills revised its five year forecast of property price growth across the UK to reflect rising interest rates and higher cost of living. It expects prices to grow 3.5 per cent this year, fall during 2023 and 2024, before resuming growth in 2025. By 2026 it expects prices to be up a total of 8.2 per cent, significantly below inflation and far lower than the UK average forecast of 17.4 per cent growth.
Knight Frank is marginally more optimistic, forecasting that prices in London will grow by 13 per cent over the next five years.
https://www.standard.co.uk/homesandproperty/property-news/london-house-prices-fall-seasonal-patterns-b1018311.html
