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House slump worst in London
Mira Bar-Hille, Property Correspondent01.12.08
London house prices are now falling faster than anywhere else in the country, figures reveal today.
Price monitors Hometrack have found the average house price in the capital has fallen by almost 10 per cent in the last year, compared to just 8.1 per cent across the country.
House prices in London fell on average by £3,500 in November, with the average price across the city now £285,400.
The fall means that in London's four cheapest boroughs the average property price now stands below the £175,000 stamp duty threshold.
The lowest of these is Barking and Dagenham, which has an average of £143,900. Next is Lewisham at £166,100, then Bexley at £166,800, while in the Olympics borough of Newham the mean price now stands at £170,500.
A year ago only Barking and Dagenham were below the threshold.
The biggest fall in cash terms was in Kensington and Chelsea, where average prices fell by £11,400 over the past four weeks, and the biggest percentage drop was in Hackney, where two per cent was wiped off house prices.
The biggest annual fall, one of 14.1 per cent, was in Merton, while Sutton fell by 12.2 per cent. A further 11 boroughs had falls in double figures since last November.
Experts today warned that London's property market was set to fall up to 20 per cent more next year.
Seema Shah, property expert at Capital Economics, said: "Over the past few months, the pace of house price falls in London has intensified, which is not surprising given the large scale City job losses and growing expectation of sharp cuts in City remuneration.
"In addition, in the top end of London's housing market transactions of homes priced over £2million were 53 per cent lower this August than in August last year," she said.
"Buyer confidence is almost certain to be depressed further as the economic downturn gathers pace and we expect house prices to fall a further 20 per cent in 2009."
Howard Archer, analyst at IHS Global Insight said: "Credit conditions remain tight, while affordability, especially in London, is still poor.
"Unemployment is rising fast, income growth is muted and there is widespread expectation of further house price falls and recession.
"We expect house prices to end the year 14.5 per cent lower than they started, and a further 15 fall to occur in 2009.
"A reduced fall of five per cent in the first half of 2010 may then be followed by a period of stability," he added.
Richard Donnell, director of research at Hometrack, said: "The market has been stripped back to the bare bones in terms of sales numbers.
"The pre-Budget report and the base-rate cut are unlikely to have much direct impact on the market in the short run.
"Mortgage rates remain relatively high and are rarely available for more than 75 per cent of the value".
Top-end agents Knight Frank today report that the price of central London's best properties fell by 3.6 per cent in November the second largest fall on record.
Reader views (13)
House prices are already falling rapidly, and the recession hasn't really hit yet - when that kicks in, they'll drop like a stone - well a bigger stone.
I suspect the crash will continue much longer than forecast, with house prices falling much further than predicted (perhaps over 50% from peak).
The boom went on far longer and prices went far higher than most ever thought possible. After the mother of all booms we're now into the foothills the mother of all house price crashes (though expect Phil and Kirstie and others who must be suffering in the current market to keep telling you its a great time to "snag a bargain").
- Mart, London, UK
By 'house prices' do they mean offer price or actual sale price? In a market where so few houses are actually selling, the offer price would be almost meaningless.
- Ian, Amersham
My monthly payments on my mortgage are less than it would cost to rent out a similar property. Even though it is likely that I will go into negative equity soon, with falling base rates I expect the gap will only increase. The only peaple that lose out in a situation like this are those who see the property market as an investment and not just a place to live in the long term.
- Rich, London
How prices have dropped during 2008, but this is just a short term blip. Prices will rise in 2009, so now is an excellent time to buy property. I have always believed in property as an investment because in the long term house prices always rise.
- Kirsty Allsopp, London
Prices are likely to crash a lot more than 20% next year with record City redundancies, repossessions and migrant workers going home (Australians. Polish etc), causing rental rates to drop and forcing buy-to-lets into further debt and forced sales.
- Will Hicks, London
The London economy has suffered the most from the Nu Labor tax and burn crash.
- Jacqueline, Hampstead, London
With the economic downturn discouraging foreign workers from coming to London and seeking accommodation, and less people investing in property for homes to rent, house prices will fall further in the city. This is a welcome reality check to the housing market after unrealistic percentage rises over the last decade. This can only be good news for London's diverse income inhabitants and its key workers who are now more likely to stay.
- Keith Grey, North London
I'm wondering just who really believes that prices are going to stabilize within in the next 3 years or so. This recession will continue longer than our politicians are saying and confidence in the housing market will stay low until there is real growth in the world economy.
- Mike Melbourne, Bedford England
A house I was buying in Merton has just fallen through because someone from the council advised the 'inhabitant' (not tenant, as she is technically a trespasser, according to the Police who attended the dispute) that by forcing eviction she will jump the housing queue and get a council property (the owner of the house had already offered alternative accommodation but she is holding out for the 'better offer'). Can this scenario be related to Merton having the highest % fall in house prices? I am now looking elsewhere ...
- Kathy M King, London, UK
Couple that with the massive tax rises and the administrative rules from the Nu Labor bunch and London is brought to its knees! It is not fun anymore here.
- Georgie, Islington, London
They went up the most, so it ain't rocket science to suggest they go down the most.
- Paul, London
The actual rate of price falls is higher than most reports suggest because auction sales are excluded. The Land Registry in particular should now reconsider the eccentric policy of ignoring auctions of flats and houses if an accurate picture of what is happening is to be presented.
- James, London
I have to say that the 'average' numbers for most areas in London are completely non-indicative due to the disparity is housing types and awkward demographics.
For Example, Tower Hamlets has vast areas of cheap ex-council blocks and post war housing then small concentrates of high value housing. Thus establishing an 'average percentage' is almost impossible.
Only Chelsea and Kensington have sufficient balance to indicate a genuine measure. Therefore, you can only take these types of reports with a big pinch of salt.
- Sandy, London
