House price growth in London often leads the rest of the UK market. After high growth between 2010 and 2015, a growing proportion of markets in the capital started to register price falls.
Now the same trend is spreading into Southern England, according to Hometrack, which says that over a third of homes are currently in markets with annual price falls, concentrated in higher value markets, and that there are limited signs that this trend is reaching the Midlands.
However, Richard Donnell, director of research and insight at Hometrack, says: “We expect the re-pricing process in regional markets to be more short-lived than in London. Sales volumes have fallen back since 2014 but once values re-align, we expect sales volumes to increase. With house prices in London leading the rest of the housing market, we've seen price falls across regional markets. This report shows the extent to which the recent trends in London have shifted into regional markets.”
London sales peaked in 2014 and are now 25% lower
Housing sales volumes have fallen back much further than prices. Transaction volumes peaked in 2014 at 118,500 and have since declined by 25% to 87,600. Yet the average price of a London property is still 20% higher than in 2014. Residential values peaked in mid-2017 and are currently 2.5% lower at a regional level.
When house price growth is negative at a regional level it means a significant portion of local markets will be experiencing negative growth. The report uses Hometrack’s house price indices to look beyond regional averages to examine how the house price slowdown has unfolded.