Home prices in the capital dropped £1,000 a day last month, according to a leading estate agent.
Residential property prices in London posted one of its biggest month-on-month declines in recent history in July, with the average price of a home in the capital deprecating by around £1,000 a day last month, or 5.6%, from £558,760 to £527,349, fresh figures show.
Although home prices in London remain a lot higher than they were at the same time last year, the fall in values in recent weeks suggests that more sellers are cutting deals to overcome the uncertainty in the wider economy, and opportunistic purchasers are taking advantage of this ‘window of opportunity’ in the market.
The drop in house prices in the capital last month significantly outstripped the UK average fall of 0.9% month-on-month, according to the data provided by haart, one of the UK’s largest independent estate agents.
The modest fall in average property prices across the country to £233,254 is in line with the 1% drop found by Halifax in its latest index.
Many reports have suggested that the EU referendum is the main cause for the sharp decline in values – after all, big events such as elections typically do unsettle markets. But it is too early to tell if the EU vote has had a major impact as monthly trends are erratic and many sales are still working their way through the pipeline.
In fact, haart report that the number of new buyers entering the housing market last month actually increased across the whole of the UK, contributing to a 6.5% month-on-month rise in the volume of property transactions, as many homebuyers no longer feel the need to put off transactions now that the uncertainty of whether the UK will ‘remain’ or ‘leave’ the European Union is finally over.
While there is certainly still some uncertainty in the housing market and the wider economy, the announcement of a cut in interest rates last week is likely to lead to cheaper mortgage borrowing rates, which should boost demand further, helping the market and property prices bounce back.
It should be recalled that the recovery in London’s property market after the credit crunch in 2009 was supported by cuts in interest rates (the Bank of England has just cut the base rate to 0.25%) and a weak sterling (the pound, currently at a 30-year low against the dollar, has been on back foot since the central bank last week announced a new round of quantitative easing).
Despite the recent fall in property values and sentiment among buyers, mindful of the far-reaching political, economic and social ramifications that Brexit may pose for the UK, the core fundamentals remain the same, including the UK’s strong bedrock desire for homeownership.
As one expert put it this week, “we have every reason to be confident about the property market’s long-term prospects. The only thing we have to fear post-Brexit is fear itself”.