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42 per cent of London’s postcodes are seeing house prices fall, according to new figures from Hometrack.
Prices are anticipated to fall further by summer, with the capital retaining a modest annual house price growth of 1 per cent. This marks the smallest rise in London in nearly seven years. Two fifths of the capital’s postcodes are recording record falls. Hometrack attributed the declines to a mix of Brexit uncertainty and tax changes for property investors leading to stretched affordability following a series of boom years.
However, other cities in the Midlands and the North are experiencing a mild property boom. House price inflation across the UK’s top cities rose to to 5.2 per cent from 4 per cent a year ago, driven by strong growth in regional cities outside southern England. According to Hometrack, postcodes in Edinburgh, Liverpool, Leicester, Birmingham and Manchester all recorded price inflation of over 7 per cent.
Ten cities saw prices grow more quickly than last year, while the other 10 saw house price inflation ease.
Southern cities also fared less well, with Bristol recording house price growth of 4.1 per cent, compared to 7.7 per cent in February last year. Southampton also saw decline, slowing from 5.8 per cent to 2.8 per cent. Cambridge and Aberdeen were the only two cities to see prices fall.
Insight director at Hometrack, Richard Donnell, said: ‘We expect the balance of markets registering price falls to increase over 2018 as prices continue to adjust to what buyers are prepared to pay. The weakness in London’s housing market has been building since 2015 on the back of numerous tax changes aimed at overseas and UK investors and growing affordability pressures facing home owners. Sales volumes are first to be hit when demand weakens and housing turnover across London is down 17 per cent since 2014. Sales prices are next to follow but with few forced sellers the level of price falls remains low.’
The slowdown in London is driven by price falls across inner London postcodes. Fifteen of the 46 local authorities that make up the London index saw prices fall, with the largest declines registered in the City of London, where prices fell 7.9 per cent, followed by Camden, where prices fell 1.9 per cent in the year to February. Hometrack said this was the highest proportion since the financial crisis.