London house prices suffer largest drop in nine years

Devin Lawrence
August 17, 2018

On a seasonally adjusted basis, average house prices in the United Kingdom were unchanged between May 2018 and June 2018, compared with an increase of 0.5% in average prices during the same period a year earlier.

The index includes all residential properties purchased for market value in the United Kingdom but the ONS warned that, as sales only appear in the index once the purchases have been registered, there can be a delay before transactions feed into the index. However, in the same months a year earlier there was a 0.5% increase in house prices.

In England, house prices increased by 2.7% over the year to June, taking the average property value there to £245,000.

Samuel Tombs, chief United Kingdom economist at Pantheon Macroeconomics, said: 'Increases in mortgage rates have restricted the amount that home-buyers are willing and able to borrow.

'The reduction in jobseekers from the European Union, due to Brexit, also has hit demand in the capital'.

According to the figures average house prices in the United Kingdom increased by 3.0% in the year to June 2018 - down from 3.5% in May.

Many annual ticket price increases from January will be set by that reading, as the Department for Transport uses this figure to set them.

"These figures show that the cost of living squeeze is not yet a thing of the past", said Tej Parikh, an economist at the Institute of Directors, an employers group, noting high oil prices and a rise in utility bills.

You have a big enough deposit and your monthly payments are high enough.

Yopa chief property analyst Mike Scott added: "The number of buyers in the market is flat, while the number of new sellers has increased slightly, so estate agents' stock has also gone up a little".

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Annual house price rates of change, 2006 to June 2018.

Average house prices by English region, 2004 - 2018.

House prices in June rose by an annual 3.0 percent across the United Kingdom as a whole, the weakest increase since August 2013.

Jeremy Leaf, north London estate agent and former RICS residential chairman, added: "Although a little out of date, these numbers represent the most comprehensive survey of United Kingdom house prices".

'The big question is what happens to prices when the property market's own version of Quantitative Easing is taken away?'

The annual growth rate of United Kingdom house prices has slowed since mid-2016 and has remained under 5%, with the exception of October 2017, throughout 2017 and into 2018.

The average price in Northern Ireland was £133,000, marking an increase of 4.4% over the year. Three newly acquired homes in Nottingham were reserved by tenants within two weeks of the sale completion and six properties in Colchester bought in mid-June are already occupied.

The dwindling and slowing house increases could highlight the beginning of a stagnant and struggling time for house sales.

Property transaction statistics for June show that on a seasonally adjusted basis, the number of transactions on residential properties with a value of £40,000 or greater was 96,340.

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