London property prices set to fall as apartments drop in value by 11%

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UK Land Registry data reveals median sale value plummeted from £444k to £394k since August 2020

Simon Bath, CEO of iPlace Global, the creators of Moveable, and David Hannah, Group Chairman at Cornerstone Tax, outline how the capital’s property market is cooling.

There are signs of a cooldown in the capital’s property market, with apartments declining in value and house prices increasing, but at less than half the rate seen across the rest of the UK. The median sale of a flat in London now sits at just under £400k, which is 11% down from a peak of around £444k in August 2020. Although the average sale price of a house is now at a staggering £634,000, Zoopla data highlights London as the UK’s worst-performing property market with just a 3.9% increase in value since May last year – which is less than half the British average. 

The real estate platform also reported that properties are taking much longer to sell in London; Simon Bath, CEO of iPlace Global, the creators of Moveable, and David Hannah, Group Chairman at Cornerstone Tax, suggest this is an indication that something has to give in Britain’s most expensive market. The trend of homebuyers opting for houses with garden space over apartments began during the pandemic and has continued to pick up steam since – as illustrated by the plummeting value of flats in London. The stunted growth of house prices is also reflective of what is happening across the nation, with Nationwide’s latest data showing they increased by just 0.3% in June, compared to a 0.9% rise in May. 

This comes amidst a worsening cost-of-living crisis which has seen energy bills soar, inflation hit its highest rate in 40 years and interest rates rise to 1.25%. Experts suggest this is finally starting to have an effect on the UK property market, with new Bank of England figures revealing consumer borrowing hit a four-month low in May – indicating Brits are now exercising much more caution with their finances. Although some initiatives have been introduced to help people get on the property ladder – such as the return of right to buy and the scrapping of affordability tests – soaring prices still represent an insurmountable hurdle for many and this is beginning to affect levels of demand. 

Simon Bath, CEO of iPlace Global, the creators of Moveable, discusses whether London prices are set to fall:

“It certainly seems as though prices in the capital are beginning to peak after years of considerable growth. Amidst a cost-of-living crisis the idea of buying in London became somewhat of a dream rather than a reality for many.

“However, with the price of apartments now falling by 11% since August 2020, this finally brings them back into the realms of affordability. The fact that house prices in London are rising at one of the slowest rates in the UK also suggests that something has to give in the most expensive markets in Britain. 

“House prices across the nation as a whole will undoubtedly seem daunting for a large number of prospective homeowners. However, we are seeing smaller increments in these rises, exhibiting signs that the property market is cooling.
 
“Whilst I predict that the housing marketing will see a slowdown in the coming months, it is also worth noting that there are still significant hurdles to overcome in terms of supply and demand. The government has recently announced various plans to overcome the supply chain issues in the market, which could further help to put the brakes on rising prices over the next year. Hopefully with these new schemes, we will potentially see a continuous decline in house prices to balance out growing inflation.”


David Hannah, Group Chairman at Cornerstone Tax, analyses whether the property market across the UK is set for a slowdown: 

“Despite the consistent rise in prices, I think there are signs of a slowdown. The average house price saw a month-on-month rise of 0.3% in June, which is lower than May’s 0.9%, combined with the expected rise of inflation to reach double digits towards the end of the year, I believe the rise in house prices will continue to slow.
 
“If more properties do enter the UK housing market, a more manageable supply and demand level will be seen and subsequently halt the rapid rise of house prices. There are positive signs in relation to this, with figures showing an increase in new listings in the UK, which will put an even harder brake on the incredible rises we’ve seen over the past few months.”

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