Residential property prices are falling on average in the English capital of London. That’s according to the latest reading of the temperature of the London property market. Stubborn mortgage rates and stamp duty are just two of the reasons why average prices fell 0.4% year-on-year in March to £535,700.
London’s homeowners are still adjusting to the end of the period of ultra-low mortgage rates, which have lingered since the global financial crisis in 2008. According to recent figures, the average London property buyer is now paying £7,500 more in mortgage repayments yearly than in 2021.
In fact, the average London household now pays more than £23,000 in mortgage repayments every 12 months.
All of this has culminated in the number of sales falling 23% through 2023. That’s largely because buyers are now becoming increasingly choosier about the properties they bid on and buy.
With the ball increasingly in the court of buyers in the capital’s property market, this will make it increasingly difficult for sellers to get the best bang for their buck. In fact, Zoopla said London sellers have had to accept offers almost £20,000 below their initial asking prices.
With that in mind, the opportunity to sell directly to cash buyers online, instead of going through a lengthy legal process for a similar sale price, could be a credible option. Even those who inherit London property from loved ones can use cash buyers when selling a house in probate. They’ll receive a fair cash price based on the current economic climate, its location, condition, and general features. Cash buyers can be a wise idea for homes in poor condition. These may take longer to sell on the open market in London.
Which London boroughs have struggled to maintain property prices the most?
Only six of the 33 local authority regions of London didn’t post annual declines in property values in 2023. That’s according to fresh data from the UK Land Registry.
Westminster was the worst-performing area of London, experiencing an average decline of almost 21%, down to £877,733. This amounts to a fall worth £232,015, which could almost pay for the average UK home.
In neighbouring Kensington and Chelsea, average residential property prices plunged 17.4%. Meanwhile, the City of London also saw declines worth 16.6%.
South-west London proved the most resilient part of the capital during 2023. The borough of Richmond upon Thames saw a 2% rise in average property values, while Camden (1.6%) and Newham (1.1%) followed closely behind.
The only way property prices are likely to rise further this year is if the Bank of England decides the time is right to cut its base rate of interest. Bank rate currently sits at 5.25% and has been held there for some time now.
Several economists predict that the Bank of England could make its first 0.25% cut in June. Others believe rate cuts won’t arrive until the autumn. The aim is to allow services inflation more time to fall. Two-to-three rate cuts have been forecast by the financial markets for this year, which would take the base rate down to 4.5%.