London house prices drop at fastest pace since 2009

LONDON: London house prices are falling at the fastest pace since the depths of the recession almost a decade ago, with the capital’s most expensive areas seeing the biggest declines.

Average prices fell to £593,396 ($820,000) in January, an annual decline of 2.6%, according to a report published by Acadata Ltd yesterday. That’s the most since August 2009.

“The city will be the weakest performing market in the country over the next five years,’’ said Lucian Cook, head of residential research at broker Savills Plc, as a decade of soaring prices means London’s more exposed to political and economic uncertainty, the prospect of interest rate increases and mortgage loan limits.

Weakness in prime property in the UK capital in recent years — partly due to tax changes — is rippling out to other locations in the city and around the Southeast.

London prices fell 0.8% in January alone, according to Acadata, which publishes detailed regional data with a one-month lag. That shows the weakness that was present for much of last year continued into 2018.

“Business has been slow in a lot of offices since the start of the year, though there are more deals being done in some central outlets,’’ Simon Aldous, a director at Savills, said in a survey published last week by the Royal Institution of Chartered Surveyors.

“Offers for homes are often more than 10% below asking prices,’’ James Gubbins, a partner at Dauntons in Pimlico, said in the poll.

“Uncertainty over Brexit is the issue,” he said.

London’s highest-priced boroughs were the biggest losers over the last year, while the largest single drop was recorded in Wandsworth, down almost 15%.

The borough has seen a sharp surge in the number of expensive apartments being built there that Londoners don’t want or can’t afford.

Increased taxes on landlords and loan limits in Singapore have also helped to damp demand from overseas, leading to a record number of homes under construction in the UK capital that have yet to find a buyer.

Nationally, slower economic growth and faster inflation since the Brexit vote are weighing on the market, while the Bank of England is raising interest rates, adding to the downward pressure.

Media coverage of the slowdown, including headlines about falling house prices, is making consumers nervous and holding back demand.

New buyers registering with real-estate agents fell for an 11th month in February, RICS said last week.