The London property market has experienced a notable shift, with average asking prices across the capital dropping by 2.1% in line with the typical seasonal decline in August. According to the latest Rightmove House Price Index, the average asking price for a house in London in July was £677,794. This represents a decrease of £17,285 compared to the previous month of June.
Diverse Trends Across London Boroughs
While the overall London market shows a modest decrease, the data reveals significant variations across individual boroughs. Brent, for instance, recorded one of the most substantial annual drops in asking prices, with a decline of 4.8%. This has brought the average asking price in Brent down to £616,308.
Conversely, Westminster has bucked the trend, experiencing a 5.4% increase in average asking prices, with properties now listed at an average of £1,537,470. Other boroughs showing positive growth include Lewisham, where prices have risen by 3.9%, Camden with a 3.7% increase, and Wandsworth with a 3.1% rise.
On the other hand, Kingston upon Thames witnessed a more pronounced drop than the London average, with prices down by 2.9%, bringing the average asking price to £689,962. Barking and Dagenham remains the most affordable borough, with an average asking price of £375,156, while Kensington and Chelsea hold the top spot as the most expensive borough, despite a slight dip of 0.9% to an average of £1,673,995.
Impact of Recent Interest Rate Cuts
The recent interest rate cut by the Bank of England has had a swift impact on the market, with mortgage rates starting to decrease. The best five-year fixed-rate mortgage currently available is at 3.83%, although this requires a 40% deposit. This is the lowest rate since the market turbulence following the mini-budget in September 2022, which significantly affected London homeowners.
The reduction in interest rates has reignited buyer interest, as highlighted by Rightmove, which reported a 19% increase in buyer inquiries since the beginning of August compared to the same period last year. This uptick in activity is especially notable as it defies the traditionally quieter summer months, suggesting a more active property market as we move into autumn.
Expert Opinions on Market Dynamics
Industry experts are optimistic about the recent developments. Tim Bannister, Rightmove’s Director of Property Science, remarked that the Bank of England’s first rate cut since 2020 has injected much-needed energy into the market. “The conditions are ripe for a more dynamic autumn market,” Bannister noted, pointing to the potential for further positive shifts in property prices.
Similarly, Matt Thompson from Chestertons observed that the increase in buyer activity, even during the summer holiday period, is driven by the more favorable mortgage products now available. He noted that even first-time buyers are being drawn back into the market, encouraged by lower interest rates.
Jeremy Leaf, a North London estate agent, echoed these sentiments, emphasizing that the rate cut has revitalized market activity. He pointed out that the anticipation of this cut had already softened mortgage pricing, leading to a modest impact on property values thus far.
However, Tomer Aboody of MT Finance offered a word of caution. While the rate cuts have boosted market sentiment, the upcoming Autumn Budget could introduce higher taxes, potentially dampening the current positivity. Aboody expressed hope that the government will continue to support the housing market to maintain this upward momentum through the end of the year.
Looking Ahead
As the London property market continues to adjust to these economic shifts, it is crucial for buyers and sellers to stay informed and responsive to the changing conditions. With the potential for further rate cuts and economic policy shifts, the next few months could present opportunities for those looking to navigate the London property landscape.
For expert advice on how these trends could impact your property plans, whether you’re considering selling, renting, or buying, Touchstone London is here to help. Contact us today for a free property valuation and to discuss how we can assist you in making the most of the current market conditions.