Sagging London property prices are causing overall housing price growth to slow significantly. The average home price in the United Kingdom dropped by 3 percent due to London prices.
U.K. Home Prices
As housing prices continue to fall in London, it has had an impact on the overall housing price growth rate in the United Kingdom as a whole. In fact, in June, U.K. price growth decreased to the lowest annual rate it has seen in half a decade. London’s prices were the top driving force according to official figures.
Across the country, the average home price rose by 3 percent in the year leading up to June. That said, the year-over-year growth fell significantly when compared to what it had been in May, which was a 3.5 percent gain. The last time the annual rate was that low was in August 2013, according to Office for National Statistics (O.N.S.) data.
The average price of a home in the United Kingdom was £228,000 in June 2018. This figure was around £6,000 higher than it was in June 2017 and about £1,000 higher than it had been in May.
London Housing Prices
The housing price slowdown is having the largest impact in London. There, home prices experienced the fastest annual rate drop since the worst portions of the financial crisis. Equally, rents plummeted faster than they have in eight years, according to the O.N.S. information.
The O.N.S. report showed that the drooping housing prices were the strongest in the south and east parts of England. London itself was hit the hardest. Its prices fell by 0.7 percent year-over-year leading to June. That was the lowest growth rate seen since September 2009. It experienced a 0.2 percent drop in May. That is the fifth month this year in which London housing prices slipped.
A Slowing Trend
The annual U.K. growth rate has been slowing consistently since mid-2016. The only time it rose above 5 percent in all of 2017 and in 2018, so far, was in October 2017. The rest of the time, the growth rate remained below 5 percent.
The O.N.S. rental data also showed a slowing trend. In the year leading to July, private rents rose by only 0.9 percent, which was slightly less than what it had been in the 12 months leading to June, which was 1 percent.