London property prices come under pressure

Published 13 January 2012

Residential property prices fell by 1%, on average, in London in the fourth quarter (Q4) of 2011 compared to Q3 2011, or £3,130 in monetary terms, the latest Chesterton Humberts/CEBR DECMBER 2011 House Price Poll of Polls shows.

Home prices in the capital finished the year up 2.1% in 2011 compared to 2010 as a whole. This compares to prices in the UK falling by 1.4% as a whole.

The level of city-type jobs employment is a lead indicator of London house price growth. City job employment fell year-on-year by 8.5% in 2011.

London house prices, throughout most of the year, have been insulated from the effects of the recession and public sector job losses. However, potential buyers have become concerned about the Eurozone sovereign debt crisis in recent months, which has started to negatively affect the capital’s house prices.

According to the pol, London home prices have fallen by 1% in Q4 2011 compared to the previous quarter. This puts the current London house price average at £342,286 in December, which is around 2.5% higher than the same month last year.

Annual price growth in London has slowed to 2.5% in 2011 after rebounding by 10.3% in 2010. This ‘below-trend’ growth in home prices is partly explained by a net loss of 26,800 city jobs in 2011 – representing a 8.5% annual fall in city employment.