London house prices starting to stabilise, report finds

London house prices are starting to firm following a three-year slide, a report suggests.

While prices in the capital are not expected to see a big jump in the near future, signs that prices are starting to stabilise could have a positive impact on house sales, according to the Zoopla UK cities index.

While house prices were still falling across more than half (55%) of London postcodes in February, this was down from more than two thirds (69%) of postcodes in the capital seeing prices fall in October last year.

London skyline
House prices were falling in 55% of London postcodes in February, Zoopla said (PA)

It said the parts of London where prices are increasing tend to be the more affordable outer areas.

Across the whole of London, house prices increased by 0.4% annually in February.

Richard Donnell, research and insight director at Zoopla, said: “Our latest index results show that house prices in London are starting to firm.”

He said buyers who have “stood on the sidelines” are now starting to see greater value for money and buying opportunities amid Brexit uncertainty.

Mr Donnell said: “This is supported by greater realism on pricing by sellers.

“We do not believe London prices will rebound but it is a positive for sales volumes, which are still 25% lower than in 2016.”

Regional cities have been the engine for house price growth over the last three years, Zoopla said, with prices jumping by as much as 17% since the Brexit vote in Leicester and Manchester.

And for the first time in three and a half years, house prices were up year-on-year across the UK’s 20 biggest cities in February.

It is the first time all 20 cities have seen positive price growth since August 2015, primarily due to Aberdeen now seeing prices lift year-on-year with a 1.8% increase in February.

Annual price growth ranged from 6.8% in Leicester to 0.2% in Cambridge in February.

Annual house price growth in stood at 5.8% in Manchester, 5.6% in Belfast, 5.1% in Birmingham, 5.0% in Cardiff, 4.6% in Edinburgh, 3.5% in Newcastle, 2.6% in Bristol and 1% in Oxford.

Mr Donnell continued: “House price growth has remained strong in regional cities over the last three years, rising as much as 17% since the Brexit vote, but signs of weaker growth are building as affordability pressures grow.”

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