House Price Update – September 2017
Right Move released their house price index for September 2017. Some of the following facts and figures have been taken from their article. You can view their full report here.
In previous years, September starts off with an Autumn price bounce. However, this hasn’t happened and the price of new property that is coming to market has fallen by 1.2% (-£3,660) this month. This is the first drop this time of year has had since 2013. This fall has been largely increased by London’s monthly drop of -2.9% as the region continues to readjust.
With the price of property coming to market increasing every year, for the previous six years, many buyers have seen their buying powers diminishing. However, annual average wage growth (+2.1%) is now outstripping the annual rate of price increase in newly-marketed property. For buyers, this means some good news as their finances, as they have been hit the previous few years, are being boosted by a higher increase in their wages.
However, even though affordability constraints play a major factor in slowing price rises, demand for the right housing at the right price has remained strong because of under-supply. This is because some movers have been deterred by a lack of choice and the cost of moving. Despite these factors, the number of sales that are being agreed by estate agents is 4.8% higher than the same period a year ago. Even though London has had a large monthly price fall, its estate agent sales are performing strongly at 5.6%.
The national monthly drop would be much smaller, at -0.5% if London was not included in the average. London’s drop has been because of readjustment that is mostly being seen in higher-end boroughs.
A Closer look at the capital
The large monthly fall has pushed the annual rate down to -3.2% which has been the largest year on year decrease so far for this decade. In contrast to the market in the most expensive boroughs, the cheaper areas are rising each year. In comparison, the seven most expensive areas are all experience a down on prices, whereas the 12 cheapest have increased.
For Londoners to try and combat this, it is best to look for the most affordable housing that is out there. By focusing on this, it will end up increasing demand and will cause an upwards price pressure. The top five boroughs that have increased in price, have risen between 5% to 10%. Even though these houses are not classed as affordable, they are between £300,000 and £660,000, which is still relatively cheap for London. However, throughout London, there are still pockets of high demand but are concentrated around specific streets, schools and transport hubs.
Between 2009 and 2015, there were a substantial proportion of property buyers who were cash buyers, however, this is not the case at present, and within the current marker sales volumes in prime London locations have dropped. Which has caused the market to soften to where it is now. Now, homeowners are not in a hurry to get rid of their properties, which has ended up in fewer listings that are available to buyers, and ultimately, fewer sales.
Within the 2009 and 2015, Central London was bursting with investors. All looking to purchase property to access a safe financial environment. However, because of the 3% charge on stamp duty paid by investors, along with the uncertainty about how Brexit will affect the London property market, investors are not willing to pay out into the market. Investors are slowly entering back into the market, but numbers are still much lower before the referendum. This has caused London’s large price drop and is why other areas are performing better in comparison.