Signs of strength for Autumn property market as London recovery begins
The long-maligned London property market indicated signs of strength in September as asking prices once more began to rise.
Data included in Rightmove’s latest House Price Index found a monthly increase in both central and outer London zones of just over 1% combined, albeit still recording an average 0.6% decline against September 2017.
High-valued properties, in particular, saw a greater monthly surge in asking prices, up 2.7% on August and 7.5% annually with the number of transactions also increasing 6% compared to the same time last year. It’s encouraging news for first-time buyers though with units on the lower end of the market seeing just a 0.5% monthly increase.
The high-value property market in London has really struggled of late. However, the number of sales of homes worth over £750,000 has increased by 6% compared to the same time last year, whilst asking prices for properties within the heart of the capital have dropped significantly from £823,000 to £756,000 – again aiding buyer affordability.
Miles Shipside, director at Rightmove said of the results that: “It’s been a hard and rocky road to recovery at the upper end of the London market, taking two successive years of price falls. London is a barometer and sometimes a catalyst for rises and falls in the rest of the UK housing market.
“The recovery in the upper end is encouraging but the painful and drawn-out process of price reductions has yet to run its course especially in parts of Outer London and the commuter belt that saw very sizeable and unsustainable price rises.
“More sellers and agents will need to re-adjust their expectations to be in line with what buyers are willing or able to pay, as it seems that buyers are out there if the price is right.”
Autumnal boost for markets nationwide
And it’s not just London landlords and property owners that will be pleased with this latest dataset. On a national level, average house prices remain 1.2% higher compared to September last year with a monthly average increase of 0.7%.
Whilst key growth markets including the North West and South West continue to grow steadily, areas including Wales, the West Midlands, East Midlands and Yorkshire have all enjoyed plus-4% annual growth.
Shipside noted that a shrinking gap between wages and property value growth has helped spur market activity, especially in the capital where asking prices had risen by over 50% between 2011 and a peak two years ago.
“Buyer affordability ratios were not stretched to the same degree in the Midlands and the North than they were in the South, with a comparatively modest average price increase of 21% since 2011.
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“That’s left some price momentum fuel still in the tank in these regions, and means that the current momentum has the mileage to carry on into this Autumn.
“That compares to the seven-year 40% plus price binge seen in London and its commuter belt neighbours of the South East and East of England, which is the cause of their current indigestion.”
Homeowners can expect to see average asking prices climb once more this month before a seasonal festive decline towards to backend of November and through December.