After it seems like an eternity of reporting on the never-ending increase in house prices in London and around the UK, there have been recent signs in a decline as vendors realise they need to lower their sights in order to secure a sale, as revealed in an article this week from the Evening Standard. This seems to be a welcome relief to buyers, especially those attempting to purchase a property within a reasonable distance to the capital for work.
After years of continuous growth, the asking prices in Greater London has decreased 1.6% annually. The average price being sought now is £544,103, according to data from home.co.uk. This news comes amid mounting disquiet over the viability of London’s housing market, which has proved problematic for first-time buyers and those wanting to move, since the capital has seen the fastest rising house price compared to anywhere else in the UK. The article mentioned that it would take almost 20 years for a single Londoner to save up to 15% deposit to purchase a property, according to research undertaken by Hamptons International. A couple would take over a decade to save as well.
According to eMoov, the online estate agency, average house prices in London are at least 12 times than the average wage in the city. London boroughs such as Hackney have seen average property costs reach up to 17.03 times the average local wage of £33,800, and other areas such as Brent and Haringey reporting of homes costing more than 16 times the average local wages. The polarity of what buyers can afford and what vendors want to be paid has led to a dramatic decrease in the number of property transactions occurring in London. Data from the Bank of England revealed that the number of new home loans fell in March to its lowest point in half a year. Martin Ellis, housing economist for mortgage lender Halifax, remarked: ”House prices have stagnated over the past three months, and housing demand appears to have been curbed in recent months due to deterioration in housing affordability driven by the sustained period of rapid house price growth during 2014 to 2016.” The tug-of-war battle between property affordability and house price growth has seemed to finally give way and house prices has fallen as a result of this.
The Mayor of London, Sadiq Khan, has put forward plans to help with the crisis, injecting £115 million into creating over 5,000 affordable new homes in partnership with Hyde Housing Association, in a move that will focus on first-time buyers. The Mayor has commented that the situation with the housing crisis is ”simply unacceptable”, but noted that helping to solve the crisis ”will be a marathon, not a sprint,” as it will take a long time to feel the affects of the introduction of affordable properties. Another market expert mentioned in the article believes in this solution; however, he emphasized that the numbers needed are very high. ”We calculate that about 42,000 homes will be built in London this year” he says. ”The need is about 62,000.”
Even though this news of falling house prices has helped to alleviate the stress in the housing market, it still has long way to go in terms of recovery. Experts will be keeping a wary eye on what may happen in the coming months.