Property prices in London fell over the past year amid signs that Brexit uncertainty, heavier taxes on property investors and stretched affordability have hit the market in the capital.
Across the UK, the cost of the average home grew by 3.4 per cent, but in the capital they fell by 0.2 per cent in the year ending in August, the Office for National Statistics said.
The areas of London to have seen the biggest price falls are some of the most expensive in the capital, such as the central borough of Westminster, where the average price has fallen by 7.6 per cent in August to £957,062, from more than £1million in August last year.
Property prices in London fell over the past year amid signs that Britain’s booming property market is finally cooling down, figures out today show
Experts say the capital’s housing market has been hit by uncertainty over Brexit, with buyers staying put until there’s more clarity about the outcome of negotiations, while a crackdown on buy-to-let has discouraged many property investors.
The introduction of a 3 per cent surcharge in stamp duty from April 2016, coupled with a staged reduction in the tax relief landlords can claim from April last year have hit activity, as they have made it much less profitable for properties investors.
Shaun Church, director at Private Finance, said: ‘London has long been a strong player in the UK’s regional property markets.
‘However, with the UK now shunning foreign property investment, hitting landlords with heavy taxes, raising stamp duty for all but first-time-buyers and voting to leave the European Union, domestic decisions have conspired against the market.’
‘The ongoing decline of house prices in London reflects the uncertainty both nationally and internationally about London’s position in a post-Brexit landscape.’
7-bed detached house in Richmond Park, SW15, Marsh & Parsons. Reduced 37% – was £5,5million, now £3,495million
3-bed house in Notting Hill, Foxtons. Reduced 33% – was £2.5million, now £1,49million
And the capital’s property stagnation comes as Theresa May is proposing plans to charge higher stamp duty for foreign buyers when they buy property in the UK.
The surcharge – which is in addition to the present stamp duty, including the higher levels introduced two years ago on second homes and buy-to-lets – could be as much as three per cent, if implemented.
Richard Broer, regional director for Hamptons International, said the slowdown in the capital has been gradual over the past year and is down to a series of factors, first of all buyer affordability, but also stamp duty increases and, increasingly, uncertainty over Brexit.
‘After many years of sharp increases, we’re definitely assisting to a price correction,’ he said. And added: ‘Sellers are now learning to accept lower values.’
6-bed flat in Byrne Road, Balham SW12, Foxtons. 38.5% reduction – was £1,625million, now £1million
3-bed flat in Montagu Mansions, Baker Street, W1, by Manors. Reduced 38% – was £2,25million, now £1,55million
Allison Steele of Regent Property in London said: ‘Uncertainty over Brexit is having a massive impact combined with CGT (capital gains tax) implications.’
Hammersmith & Fulham, in the West of the capital, has seen prices fall by 6 per cent from £781,175 to £734,254 in the year, according to the ONS.
In Southwark, prices dropped by 4.2 per cent to an average of £512,874, followed by Wandsworth, where prices fell by 3.8 per cent to £610,048 and Camden, where prices fell by 2 per cent to £846,662.
B K Bhalla of Acrewoods in Hounslow said: ‘The residential sales market to the West of London is struggling. Main focus of concern with buyers and sellers is the stability of current government and Brexit. Plenty of mortgage deals available, as lenders chasing very few buyers.’
2-bed flat in Canary Wharf, E14, Foxtons. Reduced 46% – was £1,65million, now £900,000
2-bed flat in Queens Gate, SW7, Reduced 39% from £1.75million, now 1.1million
The ONS said the South East of England saw the lowest rate of growth across the UK, with prices increasing by a very modest 1.9 per cent over the year.
‘Over the past two years, there has been a slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England,’ said the ONS report.
‘The lowest annual growth was in London, where prices decreased by 0.2 per cent over the year, down from being unchanged in the year to July 2018.’
The statistics body said that London and the South East has seen a ‘sustained slowdown’ in house prices.
House prices in England increased by 2.9 per cent in the year to August 2018, down from 3.3 per cent in the year to July 2018. The average price of a home in England is now £250,000.
House prices in Wales increased by 6.2 per cent over the last 12 months to reach £162,000. In Scotland, the average price increased by 4.1 per cent over the year to stand at £153,000. The average price in Northern Ireland currently stands at £133,000, an increase of 4.4 per cent over the year.
In England, the East Midlands saw the biggest house price growth – up 6.5 per cent over the year. The West Midlands was next at 5.1 per cent while Yorkshire and the Humber followed at 3.7 per cent.
Across the UK the cost of homes grew by 3.4 per cent, but in the capital they fell by 0.2 per cent in the year ending in August, the Office for National Statistics said.