A premonition from the other side of the pond?
London home prices are falling at the fastest pace since the financial crisis. All of Great Britain’s markets are slowing but Acadata’s latest figures indicate that Britain’s capital is the worst performing part of its housing market.
During this year through September, Aradata, a British listing property services company, indicates the London market has declined 2.7%, the worst decline since 2009. This August, there was a 0.7% decline, the first negative reading since 2011, as sellers in London’s most expensive boroughs (Westminster, Hammersmith, Wandsworth) were forced to cut prices.
The average price of a London home is a bit less than $773,000, the lowest since 2015. Homes priced at the top of the market are under the most pressure. With values falling for six consecutive months, Acadata indicates that prices in almost one half of London’s 33 boroughs have fallen in this year through August.
Most industry experts look to uncertainty caused by Brexit, higher property taxes for landlords and the prospect of the Bank of England raising its interest rates for the first time in a decade. Any similarities to housing prices at the top of the market in New York, one might ask?
Movement in housing markets outside of London is better despite slowing just a bit from 2016. A bright spot in the market? Sales of new construction both inside and outside of London have increased 24% in Q3 when compared to Q3, 2016.
Affordability is a hot topic in Britain as it is here. Britain’s Prime Minister, Theresa May, recently announced that the government’s “Help to Buy” program that offers mortgage assistance to those in need will be extended. Unfortunately, “Help to Buy” will not be effective in London because London’s home prices are double the national average and 10X the earnings of a first time home buyer.