London Housing

London house price growth expected to slow over 2017




The year-on-year rate of house price growth across London has slowed close to its lowest level for three years.

This news comes from the UK Cities House Price Index by Hometrack, which has found that London’s year-on-year house price growth is currently 9.1%.

Despite the low growth, London has seen the second highest year-on-year growth compared to 20 of the UK’s biggest cities, with only Bristol recording a higher growth (10.6%).

However, Hometrack expects London’s growth to slow further to low single digits in the next six to 12 months.

This is down to a softening in demand due to a raft of fiscal policy changes aimed at overseas buyers and investors, as well as concern over the Brexit impact. 

According to the index, London’s house price to earnings ratio is at a record high, with house prices now over 14 times more than earnings; more than double the UK average of 6.5 times earnings. 

Hometrack believes this high figure for the capital is due to a lack of supply and strong demand due to low mortgage rates. 

This has resulted in an 86% increase in house prices in London since 2009.

Looking to the future regarding house price growth, Hometrack said it expected regional cities to continue to drive growth.

“Many of these cities have seen relatively limited house price growth in the last six years and have significant upside for house price inflation.

“This is subject to the outlook for the economy, borrowing costs, [and] earnings growth over 2017 as the Brexit process is started. 

“We will focus on the outlook for 2017 in more detail in the next edition of the index.”

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