London house prices are continuing to fall, with the collapse in the buy-to-let sector increasing the number of homes on the market for sale, which is placing downward pressure on property prices.
The latest Land Registry UK House Price Index shows that London saw the lowest annual price increase in May, down by 0.4%, taking the average property value in the capital to £478,853.
Although the existing political climate and Brexit uncertainty continues to weigh heavily on London’s housing market, the fact that buy-to-let investors are shunning fresh property purchases is contributing to the sharp decline in agreed sales in the capital as demand from buyers falls.
New HM Land Registry sales figures available for London reveal that the number of completed house sales in March 2018 fell by 28.6% to 6,180 compared with 8,659 in March last year.
These figures reveal a property market that is “stuttering” at the moment, according to Sam Mitchell, CEO, online estate agents Housesimple.com.
Mitchell commented: “London's property price malaise continues, with annual growth in negative territory again.
“More than anywhere else, the capital has suffered from the drop off in buy-to-let investors deserting the market as a result of punitive tax changes.”
The number of homes available for sale has therefore increased, which has pushed down prices, presenting fresh opportunities for first-time buyers, but affordability constraints unsurprisingly remains an issue in London.
John Goodall, CEO and co-founder of buy-to-let specialist Landbay, said: “House prices succumbed to an early summer slowdown in May, helping to provide a slight respite for those hoping to get a foot on the property ladder. However, the overall cost of living and outstandingly high deposit costs continue to prevent many aspiring homeowners from entering the market.
“More and more of the so called ‘Generation Rent’ have surrendered to the fact they may never own a home in their lifetime. As a result, the private rental sector is increasingly becoming a crucial part of the housing mix and needs to be supported now more than ever.
“Recent government initiatives to professionalise the buy-to-let market and improve tenancy conditions are certainly a step in the right direction, but investment in building more properties specifically designed to rent will help to ensure the cost of renting doesn’t hit unsustainable levels.”