The average value of a home in the capital dropped 0.2 percent in September to £483,568, making London the only place in England where prices went into reverse.
Prices in six out of the 33 local authority areas in the capital.Brent, The City, Westminster, Enfield, Kensington & Chelsea, and Lambeth fell year on year. Across London, prices rose just 2.5 percent, less half the national rate of 5.7 percent.
Just outside London, in the South-East region, prices are going up at 5.5 percent a year, suggesting that growing numbers of buyers are giving up on London and looking at locations in the Home Counties instead. Today’s figures do not include the impact of the Bank of England’s interest rate rise this month, the first for a decade. When the benchmark cost of borrowing doubled from 0.25 percent to 0.5 percent.
Jonathan Hopper, managing director of home buying agency Garrington Property Finders, said: “Winter has come early to the London property market. What began as a freezing of prices in the capital’s most exclusive postcodes is turning into a harder frost on both activity and prices.
“London is now not just the worst performing English region, it’s a serial laggard. In the 12 months to September, prices in the capital rose at barely a third of the pace of those in the fastest-growing region. This shift is being driven by a steady flight of equity from London — and other previously overheated regions — to areas with greater affordability.
“It’s far too early to talk of the market seizing up, as demand remains relatively robust. But falling real wages and the ongoing problems of affordability are starting to have a noticeable chilling effect.”
North London estate agent Jeremy Leaf said: “Although, of course, there is no average UK price and the UK market reflects all different areas working at various paces, the trend in London is quite different where an excess of supply and weak demand are combining to reduce prices consistently with no real prospect of an increase until early next year at the soonest.”
At the time of the Brexit referendum in June 2016, prices in London were rising at 11.6 percent a year, but they have slowed down dramatically as uncertainty over the withdrawal process from the EU has alarmed buyers. Agents have also blamed higher stamp duty rates for slowing down demand at the top end of the market.
Today’s figures also show that the number of home sales is still plummeting. There were just 6,639 transactions in London in July, down 24 percent on last year. In Tower Hamlets, they fell by two thirds, from 463 to just 160, in an area with a population of more than 300,000.