London House Prices Fall 5% as Seasonal Factors Curb Demand
London asking prices for homes fell in November after a 10 percent jump last month as government measures to boost demand failed to offset the seasonal pre-Christmas decline, Rightmove Plc (RMV) said.
Values in the U.K. capital dropped 5 percent, or 26,956 pounds ($43,500), from the previous month to an average 517,276 pounds, the property-website operator said today. Across England and Wales, average prices declined by 2.4 percent.
As the economy strengthens and the government ramps up property stimulus measures, Rightmove said the underlying recovery remains in place. The Royal Institution of Chartered Surveyors said this month its house-price index rose to the highest in more than a decade in October.
“The excitement about Help to Buy’s early launch failed to buck the seasonal trend,” said Miles Shipside, Rightmove director. “At this time of year it’s mainly those with a more pressing need to sell that come to market, driving average asking prices down.”
Over the past quarter prices in London have risen 3.2 percent, Rightmove said. From a year earlier, values in the city are up 6.9 percent, while the national increase is 4 percent.
“Estate agents expect a more buoyant 2014 as they pick up early signs of an increase in buyer interest and demand,” Shipside said. “This side of Christmas could be the time for eager buyers to hunt out keen sellers and do a deal.”
The Rightmove report showed that the average asking price for a house in England and Wales this month was 246,237 pounds. All 10 ten regions it tracks recorded declines, with the steepest drop in London.
Rightmove said its survey shows that almost a quarter of potential buyers are unaware of Help to Buy’s second phase, which expands the offer of government-guaranteed mortgages.
With the plan facing some criticism that it may overstimulate the market, Prime Minster David Cameron defended it last week. It is allowing “hardworking people” to get onto the property ladder, he said, announcing that more than 2,000 people had been accepted for a government-backed mortgage.
The Bank of England said in a survey today that the perceived threat to the U.K. financial system from property has risen. Thirty six percent of risk managers cited property as a risk, up from 25 percent six months earlier. That’s the highest reading since the second half of 2010. Concerns were mostly concentrated on the residential market, where responses focused on the risk of a house-price correction, the BOE said.
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