It is a starkly contrasting tale of two city property surveys this morning. So is it the best of times, or the worst of times, for London’s property market?
According to agents Benham and Reeves, which have picked the bones of the latest Land Registry data, prices fell 5.7% in the capital last year, more than any other region in the land, and painfully more than the 1% average across the UK as a whole.
But the picture could not be more different this month, according to the latest data on asking prices from Rightmove. It sees a 2.8% monthly increase in January, suggesting that the bounce back in London is stronger than virtually anywhere else in the UK.
It is no great surprise that London is more geared to changes in mortgage rates than anywhere else in the country.
Buyers have to raise colossal sums to get on the property ladder so when rates go up, as they did dramatically in the year from the summer of 2022, the market is disproportionately hit. But over the past three months lenders have been falling over themselves to cut rates, easing the pressure on London first time buyers who have to stump up an average of almost a third of a million pounds.
If the anecdotal stories from estate agents are to be believed this could turn out to be a spectacularly busy spring buying season.
There are still some headwinds — thousands of existing mortgage holders on fixed deals have yet to be exposed to the pain of remortgaging.
But by the summer the bulk of those deals will have been done, certainly all the old two-year fixes on legacy rates dating back to the era of virtually free money.
How long this resurgence in demand lasts and whether it will flow through to a sustained bounce in actual sale prices later in 2024 remains to be seen.
House prices fell in all but six of London’s 33 local authority areas last year as the capital’s property was hit harder than any other region of the UK by soaring interest rates, new analysis reveals today.
The average London house price dropped by 5.2% in 2023, from £535,711 to £508,037, knocking £27,674 off the value of a typical home in the capital, according to latest Land Registry figures.
That compares with just 1% for the UK as a whole. But within that overall figure, the performance of individual boroughs varied enormously, according to data today compiled by agents Benham and Reeves. Prices fell in 26 boroughs and the City of London with the biggest declines seen in the most expensive neighbourhoods.
The biggest single fall was in Westminster, where the average cost of a home plummeted almost 21%to £877,733.
The loss in value in a single year, £232,015, is close to the average price of a home in many parts of the UK.
In Kensington and Chelsea, the average price fell by 17.4%, or £236,346, while the City of London saw reductions averaging 16.6%, equivalent to £160,221. In Hammersmith and Fulham house prices fell by 13.2%, or £101,522.
However, six boroughs did buck the overall trend to record small increases in prices over the course of a year marked by severe pressure on homeowners as they were forced to remortgage at far higher rates when fixed rate deals expired. Londoners have by far the biggest mortgages of any UK region with the average first time buyer home loan in the capital standing at £335,000.
Richmond upon Thames recorded the biggest rise in property prices with the average up 2% to £15,093.
It was followed by Camden on 1.6%, Newham with 1.1%, Islington (0.8%) and Hackney and Lewisham (both on 0.7%)
Benham and Reeves director, Marc von Grundherr, said: “With house prices cooling during the later stages of last year, it’s the London market that has naturally been hit the hardest given the far higher cost of homeownership, with all but a handful of boroughs experiencing a decline.
Largely speaking, this decline has been marginal in the grand scheme of things and the vast majority of boroughs have only seen slight corrections… However, the damage done across the prime market, in particular, has been far more pronounced, although the silver lining is, of course, that there’s never been a better time to buy at the very high-end of the London housing market.”
The figures came as latest data from property portal Rightmove showed prices starting to recover in the first few weeks of the year after mortgage rates fell sharply at the end of 2023 on hopes that the Bank of England will soon start lowering the cost of borrowing.
According to Rightmove, asking prices jumped 2.8% in London in February.
London house prices fell by as much as £236,000 over the past year, the latest research by Benham and Reeves has revealed.
Benham and Reeves analysed Land Registry data for December 2023.
Much like the wider UK market, higher mortgage rates stifled buyer demand, causing house prices to cool from the record highs seen during the pandemic market boom.
As a result, the average London house price fell by 5.2% between January and December last year, finishing 2023 at an average of £508,037 – the largest decline of all UK regions.
This decline was at its most prominent across London’s more expensive prime boroughs, with the City of Westminster recording a 20.9% reduction in the average house price throughout 2023 – a drop of £232,015.
In Kensington and Chelsea, the average house price fell by 17.4% (-£236,346), while the City of London saw reductions of 16.6% (-£160,221) and in Hammersmith and Fulham house prices fell by 13.2% (-£101,522).
27 London boroughs saw a reduction in the average house price throughout 2023; however, six bucked the wider trend to record positive movement.
Both Hackney and Lewisham saw marginal increases of 0.7%, along with Islington at 0.8%.
Newham saw a 1.1% increase in the average house price, while in Camden they climbed by 1.6%.
However, Richmond enjoyed the largest boost to house prices, up 2% year on year.
Marc von Grundherr, director of Benham and Reeves, said: “With house prices cooling during the later stages of last year, it’s the London market that has naturally been hit the hardest given the far higher cost of homeownership, with all but a handful of boroughs experiencing a decline.
“Largely speaking, this decline has been marginal in the grand scheme of things and the vast majority of boroughs have only seen slight corrections, with house prices remaining there or thereabouts when compared to the record peaks seen during the pandemic market boom.
“However, the damage done across the prime market, in particular, has been far more pronounced, although the silver lining is, of course, that there’s never been a better time to buy at the very high-end of the London housing market.”
He added: “But rest assured that when the London market does turn, it turns quickly and with interest rates now falling, it’s only a matter of time before the sleeping giant of the UK property market awakens.
“When it does, we expect London property prices to not only rebound, but to once again lead the rest of the UK with respect to the rate of growth seen.”