ONS house price index

London housing market set to get worse unless government 'wakes up'

The average UK house price increased by 0.6% in the year to February 2019, according to the latest ONS house price index.

However, this represented a decline on the 1.7% growth recorded in January 2019, and was the lowest annual rate since September 2012.

"Those regions where both demographics and higher yields support investors continue to perform well, which is a big positive," said Joshua Elash, director at MT Finance.

"However, London is by far the biggest, and most important, market."

Prices fell by 3.8% in the capital in the year to February 2019, down on the 2.2% decline registered in January 2019.

Joshua added: “The market isn’t just stagnating from a lack of transactional volume, it’s bleeding value.

“Unless the government wakes up and begins to think about encouraging and supporting a market intentionally subdued by regulatory and tax changes, and further dampened by Brexit uncertainty, it’s only going to get worse.”

Ray Rafiq Omar, CEO at Unmortgage, believed that government intervention had been the cause of this house price slowdown and, therefore, it remained in the government’s hands “to return to domestic policy issues, like housing and home ownership, sooner rather than later”.

“There’s a real need to think outside the box to help those who are stuck renting and badly want to own their own home,” added Ray.

“The government needs to take greater steps in meeting housebuilding targets and creating some much-needed movement within the market.”

John Goodall, CEO at Landbay, stated that political and economic uncertainty linked to Brexit was more acute than ever.

“The reality is we could have a combination of a new prime minister, a general election, a Labour government or a second EU referendum in the coming months.

“This means that while transactions volumes continue to tick over, the truth is we aren’t currently in a buyers’ nor a sellers’ market.

“Therefore, it’s understandable that many of those in a position to move are holding fire for now.”

However, Lucy Pendleton, founder-director at James Pendleton, stated the correction in London was the adjustment that many had been waiting for.

“Falling prices in the capital are a sign that vendors have finally got the message.

“Sellers have needed a firm hand to guide them to more realistic prices recently and they are now embracing the power of realism to sell property in greater numbers.

“This is going to stoke demand and transaction volumes, which is what the market needs.”

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