North London property prices are still climbing, but agents predict growth will soon flatline
PUBLISHED: 15:00 22 August 2017
North London’s house prices have increased since last July, but with a summer slump in the capital, what does the future hold for house prices?
Magic mirror on the wall, are London’s house prices about to stall?
The average price of a north London home has reached £754,831 according to estate agent Haart. The figure marks an increase of 5 per cent since the aftermath of the vote to leave the European Union, but a decrease of the same amount since June.
Although house prices in the UK rose 3 per cent on a monthly basis in July, London’s house prices have fallen by 0.5 per cent since June to an average of £555,397. The picture is more positive for first time buyers, up 4.1 per cent, with new buyers rising 1.2 per cent and exchanges up 5.2 per cent.
Transactions in the north of the city surged during the summer by almost 8 per cent, although fell since last July by over a quarter. In London overall, transactions fell 5.8 per cent in July, equivalent to 15 per cent since July last year.
Bye bye buyers?
In comparison to July last year, house prices have risen 3 per cent across the capital, although sales have decreased 18.6 per cent, with buyer viewings and new buyer numbers decreasing by over a third. New properties on the market have decreased by 9.4 per cent, with the number of first time buyers decreasing a staggering 44.6 per cent according to the data.
The ratio of new buyer demand to property supply has reached 1:12, down 1 per cent on June of this year, and down 28.7 per cent on July of 2016.
Paul Smith, CEO of Haart said: “There is growing clamour for radical action on stamp duty at the bottom end of the market to help first-time buyers. It is time the Government listens and takes action to clear their route to homeownership.”
Countrywide predicts that house prices will remain at 0 growth during 2017, rising to 2.5 per cent in 2018, and 4 per cent in 2019. Central London prices will decrease by 1.5 per cent this year, but increase in 2018 and 2019 by 2 and 4 per cent respectively. Prime Central London will increase by 2 per cent this year, doubling to 4 per cent in 2018, and reaching 5 per cent in 2019.
In Great Britain as a whole, house price growth is set to slow this year 1.5 per cent this year, with growth of 2 and 3 per cent in the next two years in line with anticipated wage growth.
Fionnuala Earley, Countrywide’s Chief Economist, said: “Economic conditions for households will remain challenging over the next year as inflation eats into budgets and interest rates begin to rise. In addition, fewer landlord purchasers and the later age at which people buy, is affecting the level of demand. But we expect the UK economy to recover and wage growth to pick up in response to global growth. That, combined with a continued lack of housing supply, will help to support house prices.”
As to the causes of 2017’s sluggish performance, Countrywide blames, you guessed it, Brexit. The agent argues that the negotiation process will have a confidence-knocking effect on economic recovery, with the outcome the biggest risk to the market.
Ms Earley said: “The housing market is sensitive to confidence which will be affected by the outcome of Brexit negotiations and the implications this will have – particularly on employment.”
However, the owner of Hamptons also blamed affordability concerns as inflation curbs spending power, and fewer buy to let purchases with the onset of the Stamp Duty levy on second homes.
In the coming years, it said poor building rates would push down supply and, alongside increasing wage growth, force up price growth. It added that rising interest rates in the coming years and a restrained approach by mortgage lenders would prevent an exponential increase in price in line with wage growth.
Every cloud has a silver lining
Mr Smith was more optimistic about the future as the summer draws to a close. “Looking ahead we could expect to see yet more growth in activity in August and September. Housebuilders are pushing developments towards completion as quickly as possible, and the apparent stability of the UK economy combined with a lower pound is starting to see the return of foreign investors seeking to snap up UK assets,” he said.
He added: “Although the number of transactions remains significantly behind where they were a year ago, it seems the market has reached the bottom of the Brexit barrel and now the real challenge is affordability – how can we get more young people into homes that they can afford to buy?”
That’s one question our crystal ball cannot seem to get right.
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