London’s Housing Market Loses Ground to Other U.K. CitiesPatrick Gower
London home prices are losing ground to other U.K. cities as restrictions on mortgage lending deterred buyers in the country’s best-performing market this year.
Properties in the U.K. capital climbed by an average of 0.5 percent to 403,200 pounds ($632,000) in the three months through November, property researcher Hometrack Ltd. said in a report today. That was less than five other British cities, led by Edinburgh with a 1.8 percent increase and Glasgow’s 0.9 percent gain. Bristol, Southampton and Birmingham also beat London.
In London, “we would expect to see further, modest price falls in the months ahead as prices re-align off a high base to what buyers are prepared to pay,” Richard Donnell, director of research at Hometrack, said in the report.
While the average London price increased in the period, more areas are showing declines following measures taken by the Bank of England to reign in borrowing to stem rising household debt. The average home in London costs about 9.1 times the median income of a full-time worker last year compared with 6.7 times for all of England, according to a February report by the Greater London Authority.
The biggest slowdowns in the last 12 months were in London, Cambridge and Oxford, where prices have risen the most since the U.K. market’s previous peak in 2007, Hometrack said.
Home values in the capital have climbed 16.4 percent in the past 12 months, even as wage increases across the country were sluggish. U.K. wages are rising at a rate of about 1 percent a year, according to the Bank of England.
The worst-performing location in Hometrack’s survey of 20 cities in England, Scotland and Wales was Liverpool with an increase of 3 percent to 107,000 pounds.
The company forecast that U.K. property values will rise about 2 percent in 2015, down from 8.9 percent in the 12 months through November.
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