Housing market latest: fears of no-deal Brexit spark fastest fall in London property prices in nine years

Around £2,500 has been sliced off the price of a home in the capital, according to the latest figures. 
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London house prices are falling at their fastest rate for nine years latest figures revealed today as an official report blamed Brexit for the stagnation in the capital’s property market.

The average value of a home in London stood at £484,926 in July, down 0.74 per cent on a year previously, according to data from the Office for National Statistics.

The dip sliced around £2,500 from the price of a home in the capital.

Prices have not dropped more rapidly since September 2009 when they fell 3.25 per cent while the market was still reeling from the impact of the financial crisis.


A separate one-off ONS analysis of the London property market concluded that its dramatic slowdown compared with the rest of the country over the past two years may have been because the capital was “particularly affected by a fall in net EU migration and wider uncertainty following the Brexit referendum result in June 2016.”

It also pointed to other factors such as higher rates of stamp duty on more expensive homes hitting London harder than other areas of Britain.

The fall in the property market came as it was revealed that the rate of inflation jumped to 2.7 per cent in August, meaning that shop prices once again outstripped rises in wages.

Economists blamed a further slump in the value of the pound during the summer in part for the higher than expected spike in the cost of living.

Meanwhile, London business chiefs warned of a £20 billion funding gap in finance needed to achieve the Government’s target of 300,000 new homes a year.

London First, which represents more than 200 firms, published a report stressing that £8.6 billion more was needed in the capital, a 65 per cent increase, to meet housing needs.

The study by economic consultancy Volterra suggested various option to plug the funding gap, with a “mixed economy” solution of £2.6 billion of public money and £19.3 billion from the private sector for London’s housing needs.

Jasmine Whitbread, chief executive of London First, said: “Londoners come up against a brick wall when it comes to finding an affordable place to rent, or fulfilling the dream of owning their own home, and businesses can’t afford the continued drain of talented people away from our capital.

“The Government needs to face up to some hard choices about how to unlock a further £20 billion worth of investment if it’s ever going to turn its rhetoric of building 300,000 homes year into reality.”

Communities Secretary James Brokenshire insisted the Government was confident it is on the “trajectory” towards the 300,000 target by the mid-2020, having reached 217,000 in 2017/18.

Addressing the National Housing Federation Summit in London this morning, Theresa May announced an extra £2 billion for social housing from 2022 which aims to allow housing associations and town halls to plan long term.

The funding is separate to the £9 billion of public funding put towards the existing affordable homes programme until 2022.

Mrs May also highlighted the “stigma” attached to social housing and insisted tenants are “not second-rate citizens”.