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Average house price plunges by as much as £50,000 in a year
Mira Bar-Hillel26 Jan 2009
London house prices fell by an average 10.9 per cent in the past year. New figures released today show the worst-hit area saw average sales drop by £50,000.
Separate data also shows that prices could fall by a further 20 per cent this year before rising slightly next year.
Sale price monitor Hometrack said the average London price now stands at £279,000. The 20 per cent fall, predicted by property experts Capital Economics, would reduce that to £223,200 — well below the three per cent stamp duty threshold of £250,000.
The biggest loser, according to the Hometrack figures, was Merton, where average prices fell by £50,000 in the past year, or 14.5 per cent. In Islington prices fell by 7.3 per cent, or £30,300.
Kensington and Chelsea saw average prices fall from £729,300 to £646,300 — down 11.4 per cent. Hammersmith & Fulham saw prices fall 13.3 per cent from £415,000 to £359,900.
Property experts at the Capital Economics consultancy said prices would fall faster this year than last.
Their report said: “With the recession having its roots in the financial sector, large-scale City job losses and cuts in remuneration mean that London house prices will be hit sharply.
“Even demand for prime and super-prime properties, previously a strong support for London house price growth, will decline further. We expect prices in London to fall by more than 30 per cent from their peak.”
The effect of the thousands of jobs that have been lost in London's financial sector since the start of the global financial meltdown is now being seen. Economists say a further 150,000 will go by December, forcing bankers, lawyers and other finance workers to off-load multi-million-pound homes.
Liam Bailey, head of residential research at agents Knight Frank, said: “The £1 million to £2.5 million sector is the so-called “entry-level” for City workers. It is this segment of the market that appears to have been hit most by actual job losses and fears of further job cuts in 2009.” There were only 2,746 sales at more than £1 million in London last year, compared with the record 5,386 of 2007.
Reader views (9)
Roz, that's a very intelligent analysis.
Essentially, in order to own a home in the UK, you have to be willing to do as hard as everyone else is willing to. And as people have become increasingly desperate to get onto - and stay on - the ladder, people work harder and harder and the prices go up and up.
But it's a zero-sum game. I only have to work that hard to afford a home because everyone else is doing the same.
I wonder whether there is a strong correlation in developed countries between those countries with a strong home ownership culture and overwork - there certainly seems to be (or have been until recent developments) in the UK!
- David, London, 27/01/2009 18:15
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Crash Gordon said it only could go up.
- Georgie, Islington, London, 26/01/2009 18:26
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Do I still have to get HIPS?
- Johnny, London NW1, 26/01/2009 15:43
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Nice one Freddie...hugely intelligent contribution. Fact...its not a moral crime to own 2 homes and fact most people who own them will have more than enough in the way of assets to ride out the storm. Muppet
- Rob, london, 26/01/2009 14:27
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And I still can't afford to buy one! How do you get a deposit together if you've always had to pay rent . . . ?
I don't bear malice towards second-home owners: the fault lies with Gordon Brown for raiding the pensions - it made everyone want to invest their money in bricks and mortar instead. The Government colluded in the bizarre notion of a housing 'ladder' instead of a 'market' and profited from increased duty from houses being sold every 2 years instead of every 20. The banks got more money in interest and the estate agents got more commission: these costs all had to be recouped before the seller could buy another house.
Historically the problem goes back even further than that, to feminism. Mortgages used to be granted only on one salary per property: women, understandably, wanted equality and their salary to 'count' too: DINKies(Double Income No Kids) were able immediately to beat the offers of traditional families where one parent stayed at home and raised the kids. Mums then had to return to work from necessity rather than choice. The only way Singletons could get in on the act was to club together: they bought up all the 3-bed family flats and turned them into 2-beds both ensuite. This left few affordable properties big enough for families to live in, forcing up the prices and rents of those that were.
'Vicious' circle indeed. The country needs a return to jobs that last more than 2 years so the workforce can be static enough to stay put.
- Roz, Chamonix, France, 26/01/2009 14:23
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I guess the introduction of the HIPS tax from the Nu Labor politburo can be cancelled no?
- Phil, Islington, London, 26/01/2009 14:13
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A message to all second home owners "Yippee" now you know what it feels like to be a local and not be able to afford a home because of greedy people like you.
- Freddie, London, 26/01/2009 12:49
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Hometrack takes its data from the 'opinions' of estate agents, therefore is likely to show an 'optimistic' view of the market. All the other real indices are showing 15% falls and more of the same to 2009 AND PROBABLY 2010 TOO!
- Smell The Coffee, London UK, 26/01/2009 12:36
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Just having one roof over your head should be enough of which having a mortgage (just the one) should be the norm. The drop in house prices leads me to hope that one day me and my partner may be able to afford a house and get a mortgage instead of renting all our lives (yes we both work). Unless your an investor in property and have more than one house then most people can cope with the house price slump and only the selfish greedy bracket who fuel this house price / availability nonsense will lose out and lose money. Does anyone actually care about them?, I certainly don't. WINNER!!!!
- Dc, London, 26/01/2009 11:24
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