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What Does London House Prices Falling Really Mean?

 
 
 
 
  16 Nov 2017

The fact that the London property market stands alone from the rest of the United Kingdom can be quite polarising and it means that there are a lot of different opinions about the market and what happens in it. This can be seen with the fact that when it was announced that house prices in the rest of the UK were rising while London house prices were falling, there was a lot of joy and perhaps even laughter in some quarters about this reversal of fortunes.

Given that people across the country have watched London house prices rise and rise compared to their own, you can see why a slight change to the recent status quo would elicit such a response. However, it is important to remember that there is always at least two sides to matters in the property market. While falling house prices in London will be bad news for people who won property and who are looking to sell, what about people looking to buy property in London? A fall in property prices would actually be good news for them so it is difficult to say with any degree of certainty what house price movements mean for everyone.

The figures are worth considering

With respect to the actual figures, the Nationwide listed the September 2017 London average house price as £471,761 which is a drop of 0.6% compared to the September 2016 figures. If you’re looking to make the comparison, the UK figure rose by 2.2% for the same time frame. The same source listed the average price for property in the North East of England as £125,237.

There will be some people who are looking for London house prices to continue to fall but this is unlikely to be the case. One major issue that stands against this is the fact that there aren’t enough houses available in London. This lack of supply means that demand outstrips supply of property and this plays a big part in how the London market has behaved in recent times. There are many external factors impacting on the London property market, such as the ongoing Brexit issue, but ultimately, the lack of supply of homes is the leading factor that shapes the London market.

Markets react to change

You also have to consider what would happen if London house prices continue to drop. More people would be able to afford a mortgage and home, so this would increase the demand further. Conversely, if property owners were getting less for their home, some would decide against selling their property at this point in time and this would lead to less homes being supplied to the market. When you have an increase in demand and a fall in supply, prices will rise so there are fundamental reasons why London house prices won’t continue to fall.

There are some parts of London where it could be argued that a price fall is overdue but equally, there are parts of the capital where house prices will continue to rise consistently. With many developments, both with property and transport, taking place, the factors that lead to increased property prices are still in place across many parts of the capital.

It is tempting to look into the future on the back of this recent fall in London house prices but ultimately, unless this trend is sustained or increased, there is no reason to think that will outline the future of the London property market for months or years to come. If you are keen to stay in touch with property market, get in touch with Jezzards.


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