Property market set to turn positive in London, says latest index report

The property market is recovering in London with increasing rents sent to tempt more buy to let landlords back into the sector which could result in significant prices rises, according to the latest index report.

Rock bottom sales and rental stock levels are initiating a revitalisation of the London sales market, led by several boroughs such as Wandsworth, Hackney, Haringey, Hammersmith and Fulham, Southwark and Islington.

The Home.co.uk asking price index report says that these London boroughs are all showing double digit rent inflation, yields are soaring and, consequently, home prices are about to surge.

Overall, Greater London’s price correction is complete, it says. ‘All the top performing boroughs in the lettings market in terms of rent growth will soon translate into the top performing sales markets in London, as increasing numbers of investors spot the opportunity and capitalise on better yielding housing assets. Sales stock levels in the central London boroughs haven’t been this low for several years and prices look set to surge accordingly as demand picks up,’ said Doug Shephard, director at Home.co.uk.

He explained that both supply and residual sales stock levels have shrunk and this portends a return to price growth. Such is the rate at which yields are improving, the firm is predicting a wave of investment, commencing in the central boroughs and moving outwards, which will trigger breath taking growth in home values over the next 12 months and beyond.

Overall asking prices are down just 0.1% month on month and year on year in England and Wales while in Scotland the average is up 0.5% on a monthly basis and up 0.9% year on year, the data shows. In Wales alone, the rise is 0.6% and 4.6% respectively.

This takes the average asking price in England and Wales to £308.607, in Scotland to £187,545 and in Wales to £212,761. In Greater London the average price is £515,727, down 0.2% month on month and 1.6% year on year.

However, at the regional level in England the property market presents a very mixed picture. Shephard said that at one extreme, Northern and Western regions and Wales are in the final throes of their growth phase while the East of England is firmly in the grip of the inevitable price correction, following a long period of unsustainable growth.

The South East property market, like that of London, is showing some renewed strength. Average asking prices were down just 0.1% month on month and are 1.5% below a year ago at £394,877.

Meanwhile, both the East and the West Midlands property markets are destined for a painful period of price correction after many years of excessive growth of 36.4% and 35.9% respectively since September 2012.

In the East Midlands average asking prices were unchanged month on month at £238,237 while year on year they are up 2.1%. In the West Midlands month on month they are down by 0.2% month on month to £255,115 and are still up 2.5% compared to a year ago.

Shephard pointed out that steady home price rises continue in Northern regions and the risk of price falls looks very low. In the North East asking prices increased by 0.3% month on month and by 2.4% year on year to £161,018. In Yorkshire and the Humber they were up 0.2% and 3.2% to £202,232. While in the North West there was an annual rise of 2% to £207,532, but unchanged on a monthly basis.

Shephard also pointed out that while annualised price growth across England and Wales remains in the red by the smallest margin of 0.1%, making this the eighth consecutive month registering negative growth, it should be noted that in September 2018 the annualised rate of increase of home prices was just 0.9%.

The East of England is the UK’s worst performing region, with the average asking price down by 2.9% over the last 12 months and down 0.5% month on month to £349,525. In the South West asking prices increased 0.2% on a monthly and an annual basis to £325,791.