Samir Salya on the Reversal of London’s Property Prices

While London property prices have seen a rapid increase in recent years, 2017 saw a pricing drop for the first time since the banking crash of 2009. With the sharp slowdown in the market, the long-standing property boom in the capital has ended.

Fall in prices

The average price of a home in London fell by 0.5% in 2017. This saw the new average house price in the city stand at £470,922, according to figures released by building society Nationwide. Despite remaining the most expensive region in the UK to buy, London is now at the bottom of Nationwide’s regional growth league table.

Momentum in this market looks unlikely to pick up moving forward. With ongoing instability and uncertainty surrounding the property market, factors such as Brexit, interest rate hikes and tightening on mortgages are weighing on buyers’ minds.  Property prices look to continue to buck the national trend of growth and nearby regions could see a ripple effect of lower prices.

Worst hit regions

South and west London boroughs are seeing the biggest price hits. According to estate agents Savills, regions such as Richmond and Wandsworth are under growing strain. Coming under increasing pressure from fragile buyer sentiment, purchasers into these areas are feeling the constraints of tighter mortgage affordability rules, as well as the unknown impact of Brexit on employment. Seeing an average annual fall of 4.2% according to Savills, these areas are bearing the brunt of Brexit uncertainty and concerns surrounding interest rates.

In contrast, prime areas of London are recovering at a faster rate. Top-end boroughs such as Knightsbridge and Holland Park will record no growth for the next two years, rebounding from three years of continued decline. The area is showing signs of bottoming out, suggesting an end to an era of decline in high-priced luxury regions of the capital.

Continued foreign investment

With the market’s decline, foreign investors are taking advantage of lower prices in the city. The weak pound and softening prices in prime postcodes is attracting opportunist buyers. With Knight Frank figures showing sales prices dropping an average of 6.3% last year, foreign investors are seeing a lower price for entry into this desirable market and location.

About Samir Salya

Samir Salya is the Chairman of Reign Holdings and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing.