London property market moves out of boom phase

London’s property market has passed its boom stage and home sellers need to be more realistic at the moment about their price demands, according to Rightmove.

The February report from the home-listing website shows that asking prices were 1 per cent less from a year earlier, a sixth consecutive fall. They rose 4.4 per cent on the month, showing the usual increase at the start of the spring season.

The capital’s housing market fell behind the rest of the UK in 2017 and there’s little to suggest any improvement is predicted. Still, while multiple reports point to a cooling in London housing, the damage is being limited by cautious sellers, who aren’t oversupplying the market in a panic to get rid of their property.

That means the long-running supply-demand imbalance in the city is providing some support to prices.

Miles Shipside, Rightmove director, said in the report that end-of-the-boom prices normally readjust more quickly if there is an oversupply. However, he said that some would-be sellers are holding back, preventing a glut of competition from forcing prices downward.

The capital’s housing market lagged the rest of the UK in 2017 and there’s little to suggest any upturn is in store. Brexit uncertainty has damped demand, while years of rampant inflation has pushed ownership out of reach for many.

The mean asking price in London this month was almost £630,000, more than 20 times average UK earnings.

For those who need a fast sale, Shipside’s advice is to sacrifice some of the substantial price gains of the last few years. The average time to sell a property in London is now 83 days, up from 73 days a year ago.

Nationally, asking prices increased 0.8 per cent in February from January, though that was below the 10-year average for the time of year. The average price of £300,000 is up 1.5 per cent year-on-year. That compares with gains of about 6 per cent seen less than two years ago.

Britain’s future relationship with the EU remains the subject of intense speculation. The official line coming from London is that the UK will be leaving the customs union and single market.

If that were to happen, there would be wide ranging implications for Ireland. The agri-business sector and small and medium-sized enterprises, which traditionally have a big exposure to the UK market, are likely to take a disproportionate hit. The assumption all along was that even though Brexit would be bad for the economy, there would be some upside in the form of increased foreign direct investment, particularly in financial services.