London house prices: property market fell for second year running in 2018

The London property market fell for the second year running in 2018 with more than £6,000 knocked off the average price of a home since its peak.

Prices in the capital fell by 0.8 per cent in the 12 months to December, dragging the average cost of a home down to £466,988 by the year end, according to latest figures from mortgage lender Nationwide.

That follows a 0.5 per cent fall in 2017 making it the first time prices have dropped in the capital for two years running since the early Nineties property crash when they did not recover for a decade.

Property experts blamed Brexit for a chronic lack of confidence among buyers that was forcing many sellers to slash their asking prices.

Jonathan Samuels, chief executive of lender, Octane Capital, said: “Brexit has smashed property market sentiment to smithereens. Buying and selling property requires confidence but confidence, as we edge closer to Brexit, is close to zero. For countless prospective buyers, Brexit has put everything on hold.

“Borrowing rates may be low and the jobs market strong, but a deep undercurrent of uncertainty is causing the vast majority of people to sit on their hands. It’s about as good a buyers’ market as it could get.”

Even bigger falls were seen in the “outer metropolitan” commuter belt, which includes towns such as Guildford, Luton and Maidenhead, where prices dropped 1.4 per cent to an average of £356,531 in 2018.

Across the UK as a whole prices eaked out a tiny 0.5 per cent rise to an average of £212,281. However they fell 0.7 per cent in December, the biggest monthly fall recorded by Nationwide since July 2012.

More than £6,000: the average price drop for a London house in 2018 (Daniel Lynch)

Robert Gardner, Nationwide’s chief economist, said: ”It is likely that the recent slowdown is attributable to the impact of the uncertain economic outlook on buyer sentiment given that it has occurred against a backdrop of solid employment growth, stronger wage growth and continued low borrowing costs.”

Nicholas Finn, executive director of home buyers Garrington Property Finders, said: “We’re seeing a surge in the numbers of opportunistic, frequently cash, buyers emerging to snap up homes at large discounts.

“This is particularly true in London, where prices fell consistently for much of the year – with the weakness even spreading to the suburbs and southeast England by the end of 2018.

“Sellers of homes who bought when the market was at its frothiest, or in areas without good transport links and schools, are often having to accept substantial reductions.

“Meanwhile thousands of would-be sellers are instead hunkering down and waiting until things improve before putting their home on the market.”

Figures earlier this week from City bank UBS showed that the proportion of properties on the market in London with their prices slashed has risen to 39 per cent, up from 36 per cent last summer and double the level of three years ago.

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