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2023 was rough for London house prices — now it’s time for a rebound

The Bank of England paused its run of base rate rises last week (Gareth Fuller/PA) (PA Archive)
The Bank of England paused its run of base rate rises last week (Gareth Fuller/PA) (PA Archive)

It is a starkly contrasting tale of two city property surveys this morning. So is it the best of times, or the worst of times, for London’s property market?

According to agents Benham and Reeves, which have picked the bones of the latest Land Registry data, prices fell 5.7% in the capital last year, more than any other region in the land, and painfully more than the 1% average across the UK as a whole.

But the picture could not be more different this month, according to the latest data on asking prices from Rightmove. It sees a 2.8% monthly increase in January, suggesting that the bounce back in London is stronger than virtually anywhere else in the UK.

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It is no great surprise that London is more geared to changes in mortgage rates than anywhere else in the country.

Buyers have to raise colossal sums to get on the property ladder so when rates go up, as they did dramatically in the year from the summer of 2022, the market is disproportionately hit. But over the past three months lenders have been falling over themselves to cut rates, easing the pressure on London first time buyers who have to stump up an average of almost a third of a million pounds.

If the anecdotal stories from estate agents are to be believed this could turn out to be a spectacularly busy spring buying season.

There are still some headwinds — thousands of existing mortgage holders on fixed deals have yet to be exposed to the pain of remortgaging.

But by the summer the bulk of those deals will have been done, certainly all the old two-year fixes on legacy rates dating back to the era of virtually free money.

How long this resurgence in demand lasts and whether it will flow through to a sustained bounce in actual sale prices later in 2024 remains to be seen.