Property prices in the UK are on the rise once more – but that’s not the case in all areas of London, with some boroughs showing an annual decrease.
Despite this, many Londoners are still struggling to get on the property ladder in the capital, forcing them to leave the city to buy elsewhere, or remain part of the forever renters community.
Nationwide data on people who had moved house in the last five years also showed a marginally higher rate of people leaving cities for small towns or rural areas, compared to those coming into cities.
Toby Leek, NAEA Propertymark president, told The Independent: “London remains a highly attractive and aspirational place for many people to move to, and though house price growth is slowing, many aspiring homeowners are struggling to step onto the region’s housing market due to a myriad of factors.
“These include the growing disparity in house prices and wage growth, with the average home across the Greater London area costing around £680,000 and the average wage sitting at around £48,000, meaning buying a home costs over 14 times the average income.
“Also contributing to this struggle that many buyers are facing is the increased Stamp Duty thresholds from April this year, a shortage of supply triggered by slow rates of development and higher interest rates than those traditionally used to, making mortgaging a property more difficult.”
Price divide
Land registry data showing London borough house prices over the last 12 months reveals that while the city-wide trend might remain on the up, there’s a clear divide between central areas and boroughs on the outskirts.
While house prices in areas like Lewisham, Redbridge and Havering are up between 8 and 9 per cent over the past year, more central boroughs such as Greenwich, Camden and Wandsworth are down between 2.4 and 4.5 per cent.
For Islington it’s more than 8 per cent lower, Kensington and Chelsea is 15 per cent down and Westminster is a full 20.1 per cent below last year.
Sellers are having to accept average discounts of nearly ten per cent to the asking price, while Coutts Bank said 82 per cent of properties in prime London sold for below the asking price between January and March this year, per the Telegraph.
And that isn’t always limited to those traditionally higher-end locations.
Leaving London
“It’s not just wealthy buyers that are reconsidering their options. Mortgage rates may be easing but with stamp duty costs now higher, wage growth starting to slow and living costs still on the climb, affordability remains a challenge for Londoners whose finances are already constrained by sky-high rents,” Alice Haine, personal finance analyst at Bestinvest told The Independent.
“Homeowners in the capital typically see a larger proportion of their income swallowed up by mortgage payments than their counterparts elsewhere in the country. Plus, with most personal tax thresholds on hold, which results in people paying higher rates of tax as their income increases, it can make sense for people to relocate to cheaper parts of the UK to make life more affordable.
“The pandemic has radically shifted workers’ perception of what a healthy work-life balance is. Rather than commuting across a city every day, people can now head into the office once a week or even once a month. It therefore makes more sense for some to live in a larger property in a quieter, cheaper part of the country than trying to squeeze a family into a one- or-two-bedroom flat.
“It seems having a higher disposable income to cover everyday bills with enough spare money to go on holiday once a year and save for the future may now be more important than proximity to the office.”
Regardless of location, Bank of England data showed that the number of mortgages approved by UK lenders for home purchases dropped again in April – a third consecutive drop of net residential mortgage approvals.
With interest rates now not expected to drop below 4 per cent until the end of this year, if at all, buyers and those looking to remortgage alike may be considering taking the plunge, having been holding off until now due to declining rates in 2025.
