LONDON: House prices in London are falling at the fastest pace since the depths of the recession almost a decade ago, with the capital’s most expensive areas seeing the biggest declines.
Average prices fell to £593,396 ($820,000, Dh2.17 million) in January, an annual decline of 2.6 per cent, the most since August 2009, according to a report published by Acadata on Monday. London’s highest-priced boroughs were the biggest losers, while the largest single drop was recorded in Wandsworth, down almost 15 per cent.
Weakness in prime property in London in recent years — partly due to tax changes — has spread to other locations in the city and around the Southeast. Nationally, slower economic growth and faster inflation since the Brexit vote are weighing on the market, while the Bank of England is raising interest rates, adding to the downward pressure.
Media coverage of the slowdown has meant headlines about falling house prices, which is making consumers nervous and holding back demand. New buyers registering with real estate agents fell for an 11th month in February, the Royal Institution of Chartered Surveyors said last week.
London prices fell 0.8 per cent in January alone, according to Acadata, which publishes detailed regional data with a one-month lag. That shows the weakness that was present for much of last year continued into 2018.
The capital dragged down nationwide growth in February to 0.5 per cent. Even excluding London and the southeast, the 2.5 per cent annual rate of increase in January remained well short of the pace seen in recent years.
The housing slump may also be weighing on consumer spending, which fell for the ninth month in 10 in February, according to a separate report by Visa. Households spent the least on recreation since 2010.