Latest London market report - falling or Brexit bounce?

publication date: Sep 10, 2019
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

Latest London market report - falling or Brexit bounce?



Latest news from the Land Registry shows what an amazingly diverse market property is in London. With average prices ranging from just under £300,000 in Barking and Dagenham to an astonishing £1,254,715 in Kensington and Chelsea.


What’s interesting though is when you break away from London averages and dig down deep into what’s actually being sold, things never look quite so bad. For example, in Kensington and Chelsea although the average is over a million, one property - and it was just a flat! - was sold for a staggering £13,375,000 while I found a ‘bargain’ (!) property which had been sold for just £298,000 - the average price you would pay in London’s cheapest borough.


And in Barking and Dagenham there are more bargains to be had. A one bed in Rush Green sold for £175,000 nearly half the average price for the area, while in Barking another property sold in Longbridge Road for £135,000.


For those who think that these prices are eye wateringly unaffordable, there is still hope with shared ownership properties where you buy part of the property and rent the rest from a housing association. There are some great schemes to consider, from just £70,000, such as this one from L&Q: in Lewisham.


Alternatively, why not opt for an affordable and amazing Pocket Living home? A lovely company that have over the last five years really established themselves as the guardians to help get first time buyers onto the ladder. Their properties are sold at 20% below the local market average, so a one bed might be £266,000 in Haringey. Find out more about their current and up and coming properties for sale.


And for those that prefer an alternative lifestyle with little or no mortgage, despite reports of first time buyers finding over £100,000 for a deposit, there are plenty of amazing house boats with moorings in London from £60,000 to £100,000, although mooring fees can cost hundreds of pounds a month.


This one is my favourite, for a bargain purchase of just £65,000, you can buy this beautiful, but basic narrow boat, moored at Limehouse.


Are property prices falling or bouncing back?

There is definitely talk from agents and brokers of a ‘bounce back’ in the London market, although this isn’t coming through yet from the Land Registry stats, which tend to be three months or more behind the market.


Areas such as Kingston upon Thames, Islington, Hillingdon and Tower Hamlets are recording falls of over 5% year on year, which in reality doesn’t sound that bad, but when you have average prices here of around half a million, that’s a cool saving versus last year of £25,000. Having said that, if you missed out buying your dream property last year because you feared Brexit would cause the market to fall, with less properties for sale at this time, this could well be quite a ‘false’ saving.


But there is more positive news in Ealing and Barking and Dagenham where although only just, prices are still up by a few per cent, suggesting a more buoyant market.


Looking at more up to date data from Hometrack, they are reporting similar good news to anecdotal evidence from those in the industry:

In August, their analysis shows “Affordability in London is slowly improving from its recent peak” and in fact affordability is back to levels seen four years ago in 2015. In June, they report the “London market is coming to the end of a 3-year repricing process. There has been an improvement in the ratio of sales to new supply thanks to a small, but important, increase in sales agreed and less new supply. Prices are still falling across many parts of London on an annual basis, but the quarterly growth rate has improved. Prices are firming on the back of more realistic pricing of new supply which is much closer to what buyers are prepared to pay.”


Worried about what happens if prices crash after Brexit?

For those that are concerned about what happens if they buy now and then prices fall, this is a tricky one, especially as this isn’t under your control and as we enter the unknown effect of Brexit, then we genuinely have little idea of what impact this will have.


The only advice I can give is:-


Whether you buy or rent, there is still a cost to putting a roof over your head

My view is that if you are renting and find a property that you can afford now with mortgage rates so low, if you can it’s worth considering moving forward - after all if you can start paying off the mortgage straightaway, whereas otherwise you’ll still be paying the cost of renting, which could be more or less than a mortgage.


Are you going to miss out on your next ‘dream home’

One of the issues we have in the property market which is unlikely to get better soon is that people are staying in their properties for longer - with an average of around 20 years. So if you see a property you love and then don’t ‘go for it’ how long will you have to wait for the next one to come up?


If you intend to live in a property for a long time eg 10 or more years, typically if prices fall, they should (but not always!) have recovered.


It’s actually better to look at the ‘cost’ of putting a roof over your head, as opposed to what you pay for the property and with mortgage rates so low, this is something that can make buying now, even if prices fall, worth it in the long run.


How much did prices fall by in your London Borough in the last recession?

Although this is not a definite guide to what might happen, it’s worth knowing that for London Boroughs, property prices fell on average in London by 16.7% and this ranged from just 14% falls in Brent through to around 24% in Hackney and Barking and Dagenham.


This means if you have a low deposit you may have issues re-mortgaging and need to find a way not to be forced to sell at a loss - see below on how you can mitigate against this risk.




Mitigate the risks of price falls

Before you go ahead and purchase in a time of uncertainty, make sure you mitigate the risks of price falls, these include:-

  1. Not being able to re-mortgage
  2. Being forced to sell

Speak to your mortgage broker about what would happen if prices did fall and you were stuck on a high rate or needed to re-mortgage and didn’t have the equity to do so.


Secondly, make sure you are never forced to sell. This means making sure if you are sick, lose your job, split up if a couple, that you can still make those mortgage payments.


To do this:-

  1. Can you rent the property out if needed? What work would be required to let legally and safely? - watch episode 4.
  2. Can you rent out a room and earn up to £7,500 tax free?
  3. What insurance can you take out to protect your mortgage payments if required?
  4. If you split up, what’s the agreement on selling to someone else? Get this sorted before you move in together


Need help and advice?

Why not pop down and see me at the Barratt open evening on Thursday, 19th September 4-8pm at Lindley Hall, 80 Vincent Square, London, SW1P 2PB.


Read my First Time Buyer Guide or find out more about Buy to Let 


Download the individual London borough price analysis here.


Help to Buy a new build -
Barratt London
How to run in your new property -
The legals of buying & selling a home -
The Society of Licensed Conveyancers
 Help to Buy a new build How to run in your new property The legals of buying & selling a home




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