London house prices are down 0.3 per cent year-on-year, according to the latest Zoopla data, with the average property price in the capital standing at £536,000.
Buyers are paying 96 per cent of the asking price in the capital, with an average discount of £27,000 in June.
Across the UK, however, house prices are up 0.1 per cent and predicted to reach a two per cent increase by the end of the year. Prices are lagging behind in the capital due to continued high interest rates, said the property portal.
“London has been the most impacted by higher mortgage rates, having average home prices that are twice the national average,” Richard Donnell, executive director for research at Zoopla told Homes & Property.
Londoners have seen £7,500 added to their annual mortgage bill since Liz Truss’s disastrous minibudget, with those wanting to move home looking at restricted budgets. As well as mortgage rates constraining affordability, London buyers are increasingly gazundering (lowering their offer on a house at the last minute) after discovering issues such as damp after a survey.
“London has been the most impacted by higher mortgage rates.”
But there are some parts of London that have seen positive growth, said Donnell. “House prices continue to fall across most areas of London but these are modest falls while prices are rising in more affordable parts of inner London like Lewisham (0.8 per cent), Greenwich (0.6 per cent) and Merton (0.5 per cent),” he added.
“We expect housing sales to continue to grow in London. While house price inflation is set to move into positive territory this autumn we expect price growth to remain in low single digits for next 12-18 months as rising incomes reset affordability.”
All eyes are on the Bank of England, which is set to make its next interest rates decision on Thursday. Interest rates have been held at 5.25 per cent since August last year, and if they are finally cut it could signal relief for London’s renters and homeowners.
“We have seen an uplift in the number of buyers making an offer in July.”
Some providers have already moved to offer sub four per cent mortgage rates such as Nationwide, which last week re-introduced a 3.99 per cent mortgage rate for new customers moving home with a 40 per cent deposit.
This has boosted buyer confidence said Gary Howorth, sales director at Chestertons. “Although there is still some uncertainty over the Bank of England’s decision to cut interest rates this week, we have seen an uplift in the number of buyers making an offer in July,” he said.
“As many considered the result of the General Election forgone and with Labour suggesting an increase in Capital Gains Tax, we also saw more homeowners wanting to sell, contributing to an overall busier than usual month of July for the property market.”
