House prices in the U.K. have fallen by 1.2% in September, dragged down by a big slump in some of London’s most high-end areas, according to property website Rightmove.
Rightmove data released Monday shows that the average U.K. house asking price dropped to £310,000 (US$418,005) following a 0.9% decline in August. This marked the first monthly fall at this time of year since 2013.
Contrasting with monthly rises more normally seen in autumn, London’s asking prices suffered an unusual monthly fall of 2.9% or £18,358 (US$24,754), caused by the continued readjustment of the prime London market, Rightmove said.
Excluding London, the decline would have been a much smaller 0.5%.
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There were price drops in five out of the six most expensive London boroughs, which led to an average price fall of 2.9% year on year.
"In the current market, sales volumes have dropped in prime central London, and the market has softened to some degree," said Roger Collings, branch manager at real estate company RE/MAX in London. "We are finding that most homeowners are not in any hurry to get rid of their properties, which has resulted in fewer listings available to buyers and fewer sales."
"In 2009 until 2015 the central London market was inundated with investors looking to purchase property as a way to invest their money in a safe financial environment," Mr. Collings said. "However, since the introduction of the 3% surcharge on stamp duty paid by investors, along with the uncertainty as to how Brexit will impact London’s property market, investors have been standing on the sidelines."
The worst performers in London include Kensington & Chelsea (where prices have fallen by 10.2% year-on-year), Hammersmith & Fulham (where prices have fallen 8% annually) and Merton (where prices dropped 7.5% compared to last year).
In contrast to prices readjustments at the top, the 12 least expensive boroughs in London remain buoyant and have all seen year-on-year price increases.
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Of course, this means the affordability crisis continues, as more investors head to formerly less expensive locations. The renewed attention "pushes up demand and consequently fuels upwards price pressure," said Miles Shipside, Rightmove director and housing market in the report.
The top five fastest increasing boroughs have seen annual rises in the range of 5% to 10% in the price of newly-marketed property. Hackney and Southwark are among the cheapest Central London boroughs, which have seen annual increases of 7.2% and 9.5 % respectively.
Despite the fall in its national asking prices, the number of home sales being agreed by estate agents in the U.K. is 4.8% higher than the same period a year ago, with all regions showing increases, including London.
"Pockets of high demand still exist but tend to be concentrated around specific streets, schools and transport hubs," said Robert McLaughlin, sales director at Kinleigh Folkard & Hayward in London.
