New figures reveal that home prices in prime London areas are now falling at a similar rate to that witnessed during the 2009 market crash, with eager sellers reportedly now dropping asking prices by more than 10% in a bid to attract buyers.
In exclusive London areas, like Knightsbridge and Chelsea, property prices have dropped sharply over the past 12 months as buyers at the upper end of the market are deterred by higher taxes, as well as wider global economic and political uncertainty.
Buyers have now become much more price-sensitive and are taking a lot longer to make offers due to growing concern of a correction at the top end of London’s housing market.
But despite the lacklustre state of the housing market in prime central London, house prices in some other parts of the capital are rising sharply, with the latest data from the Land Registry revealing that the average price of a home in London now stands at a record high of £534,785.
Ripple effect
Growth in London property prices is also now rippling out to surrounding regions as purchasers widen their search for more affordable homes.
Further afield, house prices in parts of the East and South East of England are now rising faster than in London, according to some house price reports.
Commuter areas within an hour of London are particular popular with buyer at the moment, and as a consequence home prices in these regions are soaring.
Take Watford in Hertfordshire, for example. Asking prices for properties in the town have risen by as much as 20% over the past 12 months to almost £435,000, according to one leading property website.
Similar growth has been seen in places like Harlow and Waltham Cross, both of which offer direct commutes to Liverpool Street in just under half an hour. Property prices are more than £100,000 higher in Waltham Cross, edging closer to £400,000, and if Crossrail 2 goes ahead as planned house prices inevitably rise even further as the town will be directly linked to Euston, Tottenham Court Road and Victoria within 20 years.
Room for growth
With a growing volume of homebuyers driven out of London by an increasingly expensive housing market, house prices in the South East are expected to continue to grow faster than in London, with the Centre for Economics and Business Research (CEBR) forecasting that home prices in the South East will continue to outperform the market in London.
Nina Skero, CEBR senior economist, said: “The stock of properties coming onto the market stands at a record low as most homeowners still expect property prices to rise and do not want to sell before the market peaks. An ageing population also means that fewer households are incentivised to move. The pace of building is also failing to keep up with household growth, despite government efforts to boost construction.”
PPA opinion
The slump in property prices in prime central London is distorting the wider picture in London and the South East, with house prices in many non-prime areas, particularly in outer boroughs and commuter towns, continuing to rise at a rapid rate.
With research showing that a typical home in London rose in value by £197 a day between January and March, the widening wealth gap between the property haves and have-nots will undoubtedly continue.