It’s been well publicised that the London property market is going through a bit of a rough patch after close to a decade of rampaging price growth. The most recent set of stats from the Hometrack House Price Index reveal that in the 12 months up to February 18th, 15 out of the 46 London local authorities, recorded drops in value.
The worst borough to have an investment property in over the past year is the City of London, which saw average values shed almost 8%. The good news is that the other 4 boroughs to see prices drop saw much more modest slides.
Camden, which the National Office for Statistics said in September last year had seen year-on-year price growth of a whopping 13% between August 2016 and August 2017, has seen a trend reversal. The Hometrack index puts prices in the Borough covering Camden Town, Hampstead Heath and Bloomsbury as down almost 2% between February ’17 and February ’18. That made it the second steepest faller. Southwark was next, down 1.7%, followed by Islington 1.4% and Wandsworth with 1.2%.
Hometrack’s reading of London’s current property price woes is that several recent tax changes have put off both domestic and international investment property buyers. The situation is compounded by the fact that in many of the areas these five boroughs cover, price levels are unaffordable for many homeowners and first time buyers. Overall, London actually saw average house price growth of 1%, meaning that the five boroughs mentioned aside, there were still good areas in the capital to have owned investment properties.
However, the worst place in the UK to have held investment properties over the past 12 months wasn’t in any of those London boroughs but Aberdeen. The ‘granite city’, the largest in northern Scotland saw prices plummet by 7.7% as the North Sea oil industry suffered. Well-paid oil industry workers had pushed prices into what many considered bubble territory over the past several years and the drop off in the industry has had a serious knock-on effect on the local property market. Cambridge has also had a shaky 12 months with average prices down 1.2%.
Plenty of other UK regions have seen strong price growth over the same period. Big cities in the Midlands, north of England and Scotland fared well with Edinburgh, Manchester, Birmingham, Liverpool and Leicester all seeing house prices increase by over 7%. Edinburgh hit 8%.
London prices are expected to bounce back within a couple of years so investors shouldn’t be too worried. With 86% growth in the 9 years since 2009, most investors and homeowners also have a healthy equity buffer to ride out temporary softness in the market.