London Property Bubble Set To Burst?
Data collected from property websites Hometrack and Rightmove apparently show a slowing property market for London for the first time in years. In fact, Hometrack’s report shows London prices have begun to plateau, falling behind the wider UK increase of 0.1% around the month of July. Hometrack’s director of research has said that this data points to “a loss of momentum in house price growth”. On a wider scale this can be seen where the percentage of London postcodes with price rises over that period: only 11% appeared to experience growth, while earlier this year that number was at 90%. According to the Rightmove asking price survey the achieved sale price for properties has dropped to 96.4% of the asking price. As noted on the original MoneyWeek news story this shows a gradual return to the role of the asking price as a maximum guide rather than a starting-point for sales offers. The Times has also reported that 40% of deals in London are now falling through. All of these figures seem to indicate that the London market has begun to turn.
This is in contrast to the figures given by Nationwide and the Land Registry which show a continued growth in London, albeit to a limited degree. Although the Land Registry reports a 3.3% growth in London prices for July. It is worth noting that these statistics are skewed towards high-end properties and cash sales. As pointed out in MoneyWeek’s article, when sales within the City of London are excluded from these statistics the overall growth drops to 1.5% instead. Despite recording continued growth the Nationwide representative has also said that the outlook for London’s property market is, at this point, highly uncertain.