London is the Worst Hit Region in the UK House Price Slow Down
Though the UK house market continues to be resilient, house price growth has slowed down, and in some cases, it has even gone to negative. The worst hit area of the country continues to be London, and this once shining beacon of property investment has dulled considerably. A combination of economic uncertainty, fears over Brexit and unattainable asking prices have all led to many investors departure from the capital.
London was once seen as a great location for property investors from around the world. The capital of England, with its wealthy residents, enormous population and financial industry have made it an ideal location for many property investors. However, in recent years the London property market has been under increasing pressure, with skyrocketing prices and diminishing profit margins from rental yields. The slowdown in London prices is even more obvious when comparing it with other cities in the North too.
In March 2018, UK house prices fell for the second month in a row, with London performing as the weakest region for house price growth again. The Nationwide chief economist, Robert Gardner, who produced the report said “Looking ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates. Subdued economic activity and the ongoing squeeze on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year.”
It was also found that for the fourth quarter in a row, the North of England recorded stronger annual house price growth than the South, which had experienced the slowest growth since 2012. This suggests that perhaps the Northern Powerhouse objective to bridge the gap between the North and the South may be beginning to show effect. It definitely shows that demand for property in the North is increasing compared to the South. In London, prices were down 1% compared with a year ago and it was recently found that 54% of London postcodes had registered annual price falls.
The majority of UK residents simply can’t afford to buy a property in London, with the average property price reaching nearly half a million pounds. Add to this fewer people buying their first home than ever before, and London property proves less appealing.
London is again the most troubled region in terms of house price growth. It has seen an annual fall of 0.3 per cent in September according to the government’s official ONS House Price Index. The fall in London house prices highlights just how well other areas in the UK are doing. House prices in the UK actually rose by 3.5% in the year to September, up from 3.1% in August. Though growth across the UK isn’t overwhelming, it is definitely positive. With some cities like Liverpool, Birmingham and Manchester experiencing house price growth above 6% a year, London’s excessive house prices don’t seem quite as worthwhile as they used to.
Many UK property investment companies like RW Invest have witnessed a huge change in what investors are looking for in the UK, with many potential investors deciding to consider property in the North. When looking for rental yields, properties in the capital can’t compare to their northern counterparts, because house prices are just so high.