According to Nationwide, London house prices have experienced a 4.3% year-on-year decrease in June, while the Outer Metropolitan region has seen a 2.9% fall.
However, Jamie Lennox, director of brokerage Dimora Mortgages, suggests that the ONS data may not fully capture the true state of the housing market. He believes that there may be further declines yet to come.
Lennox explains that the average purchase transaction takes 3-4 months, meaning that these purchases were agreed upon during a period of declining mortgage rates. As rates have risen significantly since then, he expects less favorable outcomes leading up to the end of 2023.
Inflation has remained stubborn, with the consumer prices index rising by 6.8% in July. Although this aligns with the Bank of England’s prediction, economists had anticipated a sharper drop to 6.7%.
Samuel Mather-Holgate, from financial advice firm Mather and Murray, says that considering the steady stream of negative economic data, the stagnant state of house prices should come as no surprise.
He emphasizes that London, with its highest house prices in the UK, has been hit the hardest. Mather-Holgate predicts more challenges as recent interest rate increases have yet to impact these figures.
In the event that the central bank delays further interest rate hikes and chooses to pivot towards the end of the year due to a significant decrease in inflation, Mather-Holgate expects a deep correction in prices of up to 20%.
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