Property price growth slowed in London over the last quarter of 2017 which also saw a sharp downturn in sales and cooling rental market, according to a new analysis.
London’s property prices fell 4.1% in the year to November 2017, the largest fall since August 2009, according to Acadata figures used in the London Intelligence report.
The sharpest fall in property prices was for flats with a decline of 7%, followed by terraced houses down 2% while prices rose for semi-detached houses increased by 4%, the data shows. The biggest fall in sales was for one bedroom flats with a decrease of more than 25%.
The analysis also reveals that new housing supply reached a five year peak in 2016/2017 with nearly 40,000 homes being completed, including conversions and change of use.
Rents also fell slightly in the year to December 2017, the slowest annual growth since October 2010. However, rents for smaller flats and houses continued to rise, while larger properties saw rents fall.
The London Intelligence also highlights a number of deeper issues in London’s rental market. It shows that the proportion of income spent on renting remained relatively constant over the last three years, at between 30% and 31% on income. As rents have until recently been rising faster than wages, this suggests that hard pressed renters have been trading down to avoid increasing expenditure on rent.
The analysis also shows pressure on younger renters in London. A higher proportion of individuals renting in London are in their twenties compared to the whole of England and Wales at 49% compared to 44%.
The youngest renters on average live in travel Zones 1 and 2, which the report suggests shows that younger people are more willing to trade-off location, and often quality, and pay higher prices.
‘The headline of stagnating house prices in London is becoming familiar, but these figures help us look behind the headlines. Significantly fewer one-bed flats are being sold, particularly in some prime central London markets, and sale prices are falling, while demand for larger properties remains buoyant,’ said Richard Brown, research director at think tank the Centre for London
‘But prices have raced ahead of earnings for so long that this slackening market will not yet make much of a difference for hard pressed Londoners, especially since rents for flats and smaller houses continue to rise,’ he pointed out.
‘Housing supply reached a record level over the past year, but will need a further boost to meet the new draft London Plan targets. We don’t yet know what impact the slowdown in house prices will have on supply,’ he added.
