London, formerly unrivalled in the UK housing market, has seen house prices plummet in recent years. With house prices continuing to decline, experts say that the London property market is struggling to compete with smaller cities in the north. The once booming market has seen house prices more recently fall by 0.5%. The struggles of the capital are worrying, and are unfortunately only set to get worse – with property prices expected to drop a further 1.6% throughout 2018.
The daunting trends however have not been seen throughout every borough in London – with Kensington and Chelsea boasting a 4.1% rise in house prices, followed by a 1.5% rise in Greenwich. In comparison, Hackney saw a 3.3% decrease in house prices, averaging the capitals property price at a grim 0.5% decline.
The rest of the UK property market has however seen a steady increase in house prices, with cities such as Liverpool and Manchester enjoying an annual house price growth of up to an astonishing 7%. Over 30% of investors have also expressed an interest in purchasing property further north due to rising house prices and strong rental incomes. With house prices rising to an average of 3.3% throughout the UK, the capital seems to be losing its once legendary reputation in the housing market.
While no one can be certain about the reasons for the decline in London house prices, experts have speculated that it is a direct effect of the Brexit referendum and the uncertainty regarding overseas alliances. Due to the UK’s proposed withdrawal from the European Union, many traditional international buyers are choosing to invest in countries with more a more stable property market. With EU negotiations not set to resume in the near future, it can be expected that house prices in London will continue to fall.
Alongside the changes to stamp duty tax and the removal of tax breaks, it is no wonder that international investors are choosing to invest their money in countries with more political stability and fairer tax regulations. The consequences of such actions have had an undeniable impact on the UK housing market, especially in London with agents now reducing house prices by 10% in order to attract buyers.
Despite London’s falling and worrying house prices, the buy-to-let market has steadily improved. With average rental rates rising to a new record high of £1,615, a 3.3% increase from last year, the London property market hasn’t lost hope yet.
The changes to the property market in London have also given young, first-time buyers an opportunity to buy prime property in the capital at a reduced and fairer price. With a rising number of millennials now able to purchase their own property in London, the changes are set to make a huge difference in the demographic dominating the market.
With house prices expected to continue decreasing and an unstable market, London may just lose its popularity among investors. The consequences of the Brexit referendum have ultimately contributed to the decline in property prices and until negotiations are stabilised, London may continue facing difficulties for the next few years at least.
Author Bio: Fletcher Day are a full service commercial law firm based in Mayfair London, with a dedicated team of property solicitors in London who specialise in landlord and tenant disputes, acquisitions and property financing.
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Daniel Peacock