London house prices fell 1.8 per cent in the year to September, according to the latest data from the Office for National Statistics (ONS), making the capital the only UK region to see a fall in property prices.
The average price of a London home is now £556,000 after a monthly drop of 1.1 per cent and the annual fall of 1.8 per cent.
London buyers and sellers are “naturally concerned” about what next week’s Autumn Budget will bring, according to north London agent and former RICS residential chairman Jeremy Leaf. “Transactions are more protracted and some prices are being renegotiated,” he added.
Across the UK, average house prices are now £272,000 after 2.6 per cent rise in the year to September. England saw a two per cent annual increase to £293,000, with Yorkshire and the Humber the best-performing region with a rise of 4.5 per cent.
Next week’s late-scheduled Autumn Budget, coming a month later than last year and after weeks of Treasury kite-flying, has been blamed for creating uncertainty and disrupting an already stagnant housing market.
Rumoured property tax changes include introducing a new tax on the sale of homes worth more than £500,000, abolishing stamp duty, introducing a mansion tax on homes valued above £2 million.
“While the Land Registry data gives a rear-view of the market, this is the clearest evidence yet of the chilling effect that Budget rumours and speculation have had on buyer sentiment,” said Jonathan Hopper, CEO of Garrington Property Finders.
“It could be that the Budget is not the horror show that the market has expected, but the sheer number of rumours about tax increases for anyone buying, selling or living in a home in a high-value area suggests that some pain is coming,” he added.
“Months of pre-Budget speculation has taken its toll on house prices as it has with other parts of the economy,” said Tom Bill, head of UK residential research at Knight Frank.
“Beyond the property-related proposals, buyer demand has been undermined by a general mood of apprehension around tax that has intensified as 26 November gets closer. It’s fortunate that mortgage rates have been stable and are edging lower.”
The average private rent in the UK was £1,360 per month in October, the ONS said. An increase of £65 (five per cent) compared to 12 months earlier. London rents are now £2,265 on average.
“Rental growth remains high by historical standards, as supply continues to be squeezed,” said Bill.
“The Renter’s Rights Act creates uncertainty over the setting of rents and rules around repossession and selling, which means more landlords are trying to leave the sector. If the government decides to levy National Insurance on rental income at the Budget next week, supply will get even tighter and upwards pressure on rents will intensify.”
© The Standard Ltd