Matt Fleming, Residential Property Consultant at Aylesworth Fleming Limited
It was the best of times. It was the worst of times. Property prices rose. Property prices fell. The agents had a ball. The agents took a fall.
If you drew a circle around the Capital, with a radius of about 100 miles, give or take a nudge here or there, you could accurately describe the UK residential market in terms as harshly contrasting as Charles Dickens did when he explored the stark differences between London and Paris in the late 18th Century – only this time, it’s London that’s suffering.
Inside the circle, prices moved backwards in 2019, in some cases, up to 20%. On average however, if you consider the broad range of data available for localised markets (never completely accurate), the fall was only around 2%, with properties valued at over £1m taking the biggest hit. This not only dragged the UK ‘average’ index down, but the mood of the country’s journalists and pundits too, most of whom live inside the circle. Consequently, the picture they painted in the first half of the year, tended to be nothing but doom and gloom. But it didn’t reflect an accurate picture of the UK market as a whole. Just ask someone living in the more desirable parts of the North West, where some prices have risen over 10% over the last 12 months.
London and the South East may have suffered over the last couple of years, but, in the main, it will have been the ‘late-in’ speculators that took the biggest hit. Values in the Capital are still around 50% higher than they were at their peak in 2007, way beyond what most other parts of the country could aspire to. Prices surged in between 2012 and 2015, prior to the referendum, and there was little to suggest that trend would shift dramatically in the short term.
Then, David Cameron got involved and, on 23 June 2016, the Great British Public decided it was to time to leave the EU. Confidence faltered, especially among speculators, and even the depressed value of Sterling couldn’t sustain the meteoric rise in the market. In late 2016, some asking prices in London Zones 1 and 2 (not to be confused with selling prices) fell by over 30%!
As far as I’m concerned, the London market is still over-priced and has some more correction to cope with, especially when you consider that there is almost certainly another tax hike for overseas buyers around the corner. But it won’t be a collapse, more a gentle adjustment with those that genuinely need to sell – and buy – agreeing more realistic values. Particularly if the region wants to see the return of the genuine First Time Buyer.
Take a look at this excellent chart below, it was produced by Nationwide for their December Price Index bulletin. It shows the average time it would take someone earning the typical wage in each region to save a 20% deposit to buy a typical first-time buyer property, assuming they set aside 15% of their take home pay each month.