London house prices are ‘stuck in neutral’

Property prices in London are falling in terms as growth drops below the rate of inflation.

Residential property prices in the capital have remained broadly flat of late with an average increase of just 0.5% in the three months to September, the latest home price data shows.

With inflation – as measured by the Consumer Prices Index (CPI) – hitting 3% this month, the highest level since April 2012, house prices across London are actually now falling in real terms as the current annual rate of growth, which stands at 2.3%, has fallen below the level of consumer price inflation.

The rate of house price growth for each London borough can be found below, which shows 85% of the areas covered by the London City Index, which has been produced by Hometrack, are now falling in real terms, with further falls – in real terms – looking highly likely.

House price growth for local authorities covered by the London City index

Local authority Average price %yoy Sept 2017 %yoy Sept 2016
Epping Forest£482,3004.2% 10.8%
Gravesham£286,6004.0% 12.7%
Runnymede£452,3003.5% 7.7%
Waltham Forest£457,8003.5% 12.5%
Newham£374,3003.2% 12.9%
Bexley£342,8003.2% 12.3%
Dartford£305,3003.2% 11.7%
Redbridge£435,4002.9% 12.0%
Barking and Dagenham£290,9002.8% 15.2%
Croydon£390,4002.7% 11.6%
Brent£513,4002.6% 7.6%
Mole Valley£532,9002.6% 6.1%
Havering£367,2002.5% 15.0%
Lewisham£432,6002.5% 10.0%
Greenwich£385,7002.4% 7.8%
Bromley£470,7002.4% 9.1%
Woking£449,8002.3% 8.6%
Broxbourne£366,5002.3% 12.9%
Hackney£551,9002.0% 5.2%
Enfield£416,9002.0% 11.1%
Kingston upon Thames£527,6002.0% 5.8%
Three Rivers£532,2002.0% 11.7%
Harrow£501,4001.9% 8.8%
Haringey£542,2001.9% 8.7%
Hillingdon£427,1001.9% 10.5%
Hounslow£431,5001.9% 7.7%
Sutton£401,6001.6% 10.0%
Camden£780,1001.5% 2.4%
Elmbridge£652,3001.4% 6.9%
Dacorum£408,3001.4% 11.3%
Epsom and Ewell£496,0001.4% 7.4%
Ealing£499,2000.9% 6.0%
Wandsworth£651,3000.9% 2.8%
Lambeth£548,7000.8% 6.8%
City of Westminster£974,3000.8% -0.8%
Barnet£570,9000.7% 7.6%
Spelthorne£406,7000.5% 10.2%
Watford£389,6000.3% 12.7%
Merton£522,0000.2% 7.1%
Southwark£506,7000.1% 10.1%
Islington£646,300-0.3% 4.0%
Richmond upon Thames£721,900-0.6% 4.0%
Hammersmith and Fulham£758,700-0.8% -0.1%
Tower Hamlets£481,100-1.7% 6.9%
Kensington and Chelsea£1,254,900-1.9% -0.9%
City of London£775,000-5.0% 4.3%

 

Richard Donnell, research and insight director at Hometrack, commented: “The London housing market is now firmly stuck in neutral. Stretched affordability, low yields for investors and concerns over Brexit and its impact on employment are weighing on market sentiment.

“As a result, further house price falls in real terms across London are inevitable as prices re-align to what buyers are willing to spend. Consequently, nominal house price inflation in London looks set to remain between 1% and 3% over the next six to 12 months.”

Home price growth across many southern cities also remains flat, with the annual rate of growth in Cambridge and Oxford below the general rate of inflation at 2.3% for both.

In contrast, Scotland has seen a sharp rise in house prices, supported by a surge in property transactions – up a fifth year-on-year.

Home price growth north of the border is being led by Glasgow where property prices are up 5.6%, Hometrack said.

City Level Summary, September 2017

City Current price %yoy  Sep-17 %yoy  Sep-16
Edinburgh£219,5006.7%3.8%
Manchester£156,8006.5%6.6%
Birmingham£153,2005.9%6.6%
Bournemouth£285,1005.4%6.4%
Leicester£163,3005.4%5.5%
Glasgow£120,3005.3%1.8%
Bristol£276,9005.1%11.8%
Portsmouth£230,3005.1%8.1%
Nottingham£144,2005.0%5.5%
Southampton£222,6004.4%7.4%
Leeds£161,1004.3%4.9%
Sheffield£135,1004.2%3.7%
Liverpool£114,8003.2%2.2%
Belfast£129,1003.1%2.9%
Newcastle£125,9003.0%1.5%
Cardiff£198,0002.4%6.4%
London£493,8002.3%8.9%
Oxford£427,1002.3%7.8%
Cambridge£433,6001.7%5.1%
Aberdeen£173,900-1.8%-10.6%
20 city index £251,600 4.9% 6.0%
UK £211,200 3.6% 6.0%