Prime districts in London suffer sharp price drops as investors hang back

Brexit vote among factors leading investors to steer clear of big-ticket purchases putting damper on values in upmarket areas

PUBLISHED : Tuesday, 13 December, 2016, 4:02pm
UPDATED : Tuesday, 13 December, 2016, 7:59pm

London home prices are having their worst December in six years, led by weakness in prime areas in the capital that is likely persist into next year.

Rightmove said asking prices fell 4.3 per cent from November to £616,160 (HK$6.03 million) this month, with inner London dropping 6 per cent. The property website operator said the bubble in prime London “continues to deflate” and it sees prices there declining 5 per cent next year.

Buyers are being put off the really big-ticket purchases
Rightmove director Miles Shipside

“Alongside the seasonal slowdown, the readjustment of prices to match buyers’ greater reticence continues, especially in more expensive inner London,” said Rightmove director Miles Shipside. “Buyers are being put off the really big-ticket purchases.”

In a sign of the disparity within the city, average prices in inner London were down 2.6 per cent over the past year whereas outer areas were up 2.7 per cent. That left average prices across the capital little-changed. The split partly reflects the luxury end of the market, where an April tax increase on property investors and worries about Brexit were sapping demand.

Rightmove’s report also showed demand in London - as measured by sales agreements - was down 7.2 per cent last month from a year earlier. Nationally, asking prices fell 2.1 per cent this month from the previous month, in line with the seasonal average, and were up 3.4 per cent from a year earlier. In contrast to London, Rightmove expected national prices to increase for a seventh consecutive year next year, forecasting a 2 per cent advance.

In a separate release on Monday, LSL and Acadata said annual house-price inflation in Britain slowed for an eighth month last month to 3.1 per cent. The report also echoed Rightmove, showing London values had, on average, barely moved in the past year. It blamed that on a “significant drop in prices and transactions in prime central property.”