London’s housing market in prolonged slowdown
THE London housing market is in bad shape – possibly even worse than it looks on paper. Official numbers show that prices in the capital only started to fall this year. But it feels much more brutal to real estate agents on the ground.
James Hyman, head of the residential agency division at Cluttons, has been in the business for two decades and knows how to read the signs. The market is already down about 15 per cent in central London compared with four years ago and, in his view, it may fall another 7 per cent in the next two years.
That’s a lot of uncertainty to deal with when you’re looking to fork out 486,000 pounds (S$874,000), the average London home price – or far more, if you’re close to the centre.
The real problem is all those years of skyrocketing prices. Even with the current weakness, only a third of young adults can afford to buy a house in London on a 10 per cent deposit and a maximum mortgage of 4½ times their salaries, according to the Institute for Fiscal Studies.
And the cost of the average London residence is almost 14 times the median full-time salary in the city.
For its part, Brexit has put off overseas buyers, reducing demand by as much as 70 per cent from 2014 levels, according to Mr Hyman.
On top of that, it announced this month plans to impose higher taxes on foreigners looking to buy property in the UK, impacting roughly half of all residential transactions in central London.
Those changes took the steam out of the market, which has long been buffeted by a shortage of homes. Brexit came as the final nail in the coffin, according to Aneisha Beveridge, a housing market analyst at Hamptons International & Countrywide Plc.