In June, Nationwide reported that London house prices had experienced a 4.3% year-on-year decline, while the Outer Metropolitan region saw a 2.9% fall.
According to Jamie Lennox, director of brokerage Dimora Mortgages, the ONS data may not accurately reflect the current state of the housing market. He suggests that there could be even worse news to come.
Lennox explains, “Since the average purchase transaction takes 3-4 months, these purchases would have been agreed upon when mortgage rates were decreasing. However, with rates rapidly increasing since then, we can expect less favorable results leading up to the end of 2023.”
Inflation remained stubborn in July, with the consumer prices index rising by 6.8% in the year to July. While this aligns with the Bank of England’s prediction, economists anticipated a sharper drop to 6.7%.
Samuel Mather-Holgate, from financial advice firm Mather and Murray, believes that the constant release of gloomy economic data is contributing to stagnant house prices. He notes, “London, being the region with the highest house prices in the UK, has been hit the hardest. The impact of recent interest rate increases has yet to be fully reflected in these figures. If the central bank delays further rate adjustments, we may witness a significant correction of up to 20% in prices.”
Overall, it seems that the housing market is facing challenges due to fluctuating mortgage rates, rising inflation, and economic uncertainties. It will be interesting to see how these factors continue to shape the future of property prices in London and the surrounding areas.
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