Whisper it, but (some) housing in London has become a bit more affordable

by Dave Hill

Let’s not get carried away, because the change is not dramatic and the picture is mixed. But figures just released by Centre for London confirm what has been happening for a while – that, overall, buying and privately renting accommodation in the capital is becoming a little less expensive than it was.

The top line here is that house prices in London fell by 4.1% in the year to November 2017, which is the largest drop since August 2009, according to stats compiled by housing market specialists Acadata. That significant fall is in marked contrast to the rest of England and Wales, which saw prices continue to rise, albeit by only a little and more slowly than they have been.

However, the picture in London is uneven. Centre For London tells us that while prices in western Inner London boroughs – where high property prices have always been at their very highest – fell by an average of 3.5%, they rose by around 10% in Outer London boroughs in the south of the metropolis and in its west and north-west. They also rose, by roughly half as much in percentage terms, in Outer London boroughs to the east.

All this seems to fit the trend about “prime central” housing that has become established over the past couple of years: basically, that a period of truly astronomical price inflation has given way to a bit of a dip, variously attributed to stamp duty changes, Brexit-induced caution among overseas buyers – due to fears that London’s economy will be hit, or that the UK will become less foreigner-friendly and so on – and simply to too many super-pricey dwellings being built (or at least given planning permission for) compared with the number of potential buyers. That’s market forces.

It might also reflect, at least to some extent, another part of the London housing story that is often over-simplified and misrepresented. The figures seem very likely be an indication that first-time buyers have been increasingly looking to Outer London areas to make their first purchases, because Inner London remains so staggeringly expensive. And everyone knows someone, especially someone fairly young, for whom that has been the case (I could name two such people without trying – I’m their dad).

But the figures could also show that more people who already owned homes in the more expensive areas are deciding that now is the time to make that move to a larger place in a leafier part of the city they have been thinking about for a while, but put off because the value of their present home was increasing so dramatically it seemed financially wise to stay put for a bit longer. But now that its value might actually be starting to fall, the time has come to cash in while the going is still good – and maybe in the process contribute to Outer London prices continuing to rise.

That is the sort of factor ignored by the prevailing, populist Grand Narrative, which holds that absolutely anyone who relocates further from the centre of town has done so due to being “forced out” or “pushed out” or “displaced” by “the rich” moving in. Not that simple, I think. But here’s a simple number to add another sort of perspective: the average cost of a home in London is still £587,640.

The new house price figures are just some of those included in the latest issue of Centre for London’s The London Intelligence bulletin, which also contains other excellent statistical material on housing as well as on transport, recorded crime, air quality, migration and more.

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