Asking prices up just 0.2% month on month in England and Wales
Asking prices in England and Wales nudged up by 0.2% month on month in October, buoyed by strong growth in the West Midlands and Yorkshire, but they continued to fall in Greater London.
Indeed, asking prices in London were down 0.4%, the largest monthly drop and it means that they have now gone down by 5.6% since their peak in May 2016.
Overall, however, price reductions are creeping in as the housing market is undergoing a change to adapt to reduced demand, according to the October asking price index from Home.co.uk.
The total number of properties that had their asking prices reduced in September soared to levels last seen in September 2011 at 83,780 and the data also shows that 16% of properties currently for sale have had their prices reduced in the last 30 days, the lowest since January 2009.
The index report suggests that supply increases indicate a worsening market for sellers, up 6% year on year and the highest total since 2012 as the mix-adjusted average price growth for England and Wales fell to just 0.6% year on year, far below the rate of monetary inflation.
However, some regional property markets are seeing late cycle booms and continue with asking prices up 6.6% in Wales year on year and up 5.3% in the West Midlands year on year.
The typical time on the market in England and Wales has risen to 92 days, three days longer than in October 2017 while in London it was up 12% year on year, in the South East up 11% and in the East of England up 13%.
‘Overall, annualised price growth for England and Wales looks set to hit zero by the end of the year and fall into the negative in early 2019. This is the hangover after one of the biggest property investment binges in UK history, fuelled, of course, by ultra-low interest rates,’ said Doug Shephard, director of Home.co.uk.
‘We don’t expect the market to return to overall growth anytime soon. The key backstop for sliding prices will always be rental yield. Rents are rising rapidly in the London region, up 5% year on year, and we expect this to continue,’ he explained.
‘It will take some time for yields to improve appreciably to the extent that investors once again buoy demand. Our most optimistic forecast is for some time in 2020,’ he added.
He believes that it will be the Greater London that will be the first to show signs of recovery, with areas such as Belgravia and Chelsea that should recover first as it was there that the current downturn first took hold before spreading out into the rest of the country.
‘For the time being, prices are still sliding in these London boroughs. Since the peak in December 2015, the typical price of a flat has fallen 19% in both locations. Moreover, both the time on the market figures and stock levels are still rising in these prime areas and, as long as that is the case, prices will be heading down,’ he concluded.