As London home sellers reduce their asking prices in the largest cut in over six years this August, experts have been arguing that there are strong signs that the London property market is finally beginning to cool down.
House values in the capital have fallen 5.9% in the largest drop since Christmas 2007 to an average £552,783 property website Rightmove claimed on August 18th. The trend was followed by the rest of the country with prices all over declining by 2.9%, in a record for an August.
Demand for property usually does diminish this late in the year, but Rightmove argued that 2014’s reduction was far greater than anticipated.
According to the report many of the largest value drops in the Capital were recorded in the Royal Borough of Kensington and Chelsea itself, with other affluent boroughs such as Hammersmith and Fulham and Camden also feeling the squeeze. Kensington saw asking prices drop 7% to an average 2.2 million pounds, it is also marked as the only borough which experienced an annual decline, considering values already experienced a 1.4% decline last year. During said period the average capital house price had advanced 10.3%
In the face of the tougher mortgage rates put in place by Mark Carney (Bank of England Governor) and the expectation of higher interest rates, the market is showing signs of pressure that the surge of values may cause a bubble to develop. “Buyers and sellers are becoming increasingly aware about personal finances, given that the cost of mortgages are going up and regulators are trying to bring availability down,” said Miles Shipside, a director at Rightmove. “This limits what buyers are willing or able to pay, and helps moderate sellers’ price expectations.”
“Top-end sellers are very much discretionary ones, so can delay marketing till a more active time of year,” Shipside said. “That tends to depress property prices more in the higher-priced boroughs.”
Nationally, the annual pace of growth in prices slowed to 5.3 percent in August from 6.5 per cent in July. The average asking price was £262,401. Rightmove said the drop in monthly prices is a “lead indicator of a slower market in the second half.”