London housing market suffers worst month since 2008

London housing market suffers worst month since 2008

Central London’s housing market suffered its worst month since 2008 as prices continued their downward trend, according to the Royal Institution of Chartered Surveyors (Rics).

The organisation’s August residential market survey revealed 56 per cent more respondents saw prices fall in central London, making it by far the worst-performing region in the UK.

It was virtually the only area to see an increase in the average number of properties on agents’ books, as instructions to sell picked up significantly in both July and August. 

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Central London is also the only part of the UK where price expectations are negative for the next 12 months.

On a UK-wide basis, 6 per cent more respondents reported prices rising rather than falling – but the results varied considerably from region to region.  

In the south-east, the north and East Anglia, sentiment was modestly negative, while solid growth was witnessed in the Northern Ireland, the north-west, Scotland and the south-west.

Buyer enquiries remained flat for the ninth straight month, while 4 per cent more respondents saw a fall in new sales instructions.

Average stock levels on agents’ books remained near an all-time low, as 1 per cent more respondents saw a fall in new sales instructions

Surveyors were also pessimistic about buy-to-let prospects, with 61 per cent believing landlords would exit the market over the coming year compared to 12 per cent who felt there would be a greater number of entrants.

Respondents predicted that over the next five years rental growth would outpace that house price inflation, averaging 3 per cent and 2 per cent a year respectively.

Rics chief economist Simon Rubinsohn said: “The latest results continue to suggest that the greatest pressure on both prices and activity continues to be felt in prime central London market. 

“Although there are some signs that the wider south-east is also losing some momentum, anecdotal evidence suggests the impact is very location specific.

"Meanwhile the numbers for most other parts of the country point to a rather more resilient marketplace.”

Georgina Partridge, head of marketing and communications at London-based Plutus Wealth Management, said: “The property market is cyclical and we have been on an upward trajectory for some time.

"There comes a point where people can’t afford these things – I can understand there has been a price adjustment in the high-end area.

“In that sort of area, it is very specialist lending, with lots of overseas investment. I think it is probably a market unto itself and does not reflect what is happening in the rest of the country.”