Yahoo Finance London house prices fall for the first time in EIGHT YEARS as home owners hit by double blow
London home owners face a painful double whammy as property prices fall for the first time since the financial crisis ahead of a near certain interest rate hike.
The average price of a home in the capital dropped 0.6 per cent year-on-year to £471,761, according to latest figures from the Nationwide building society.
It is the first annual decline recorded by the lender in London since summer 2009 when the property market was emerging from the chaos that followed the collapse of Lehman Brothers.
The third quarter fall came as Bank of England Governor Mark Carney dropped another strong hint that a first rate rise for more than a decade is on the cards this Autumn.
Speaking on BBC Radio’s Today programme Mr Carney said that a rise from the current record low of 0.25 per cent will come in the “relatively near term.”
Many City commentators expect the move when the Bank’s Monetary Policy Committee meets in November. It will immediately increase the monthly repayment burden for millions of mortgage holders with tracker or variable rate loans.
The fall recorded by the Nationwide suggests that the slump first seen in the most areas of central London has now rippled out across the capital to the suburbs.
An inflationary squeeze on spending power since the Brexit referendum combined with a fall in foreign investment are thought to have dampened demand for property in the capital this year.
Other factors blamed by property experts include higher levels of stamp duty on more expensive properties and the growing talk of an imminent interest rate rise.
Alex Gosling, chief executive of online estate agents HouseSimple.com, said: “The London property market has enjoyed almost a decade of phenomenal growth. But year after year of double digit growth was unsustainable and inevitably going to come to an end at some point. That point looks like now.
“Brexit fears are also scaring off overseas investors who came to the rescue and supported the London market during the dark years after the financial crash.”
Lee James Pendleton, founder estate agents James Pendleton, said:“London has been the torchbearer of quite unbelievable growth in recent years but it has been an overvalued market for at least the last three years.
“This shows vendors and agents are becoming more realistic but you’ve got to use an agent that is going to tell you what you need hear. People have got so used to prices going up and the result is too many people have been priced out. London cooling is going to really engage buyers and put us on a better, more stable footing towards the end of the year.”
However, the fall will be welcomed by frustrated would-be first time buyers stuck in rented accommodation who have seen the property ownership ladder rise out of reach over recent years.
London house prices last fell in the traumatic months after the banking meltdown of Autumn 2008 when the entire financial system appeared on the brink of collapse. However, they steadied in Spring 2009 when the Bank dropped its interest rate to its emergency rate of 0.5 per cent.
They have since been on a remarkable unbroken run of increases, fuelled by the booming London economy, huge foreign investment, an acute shortage of new homes, and record mortgate rate lows.
