London slowdown spreads south: Zoopla

London’s housing market slowdown has spread throughout the south of England, but house price corrections are expected to be short-lived, according to Zoopla and Hometrack data.

The analysis looked in detail at pockets of housing market activity outside the capital and found that 36 per cent of locations in southern England had seen house price falls, although in the majority of cases these were below 2.5 per cent.

Areas which previously had the highest house prices seem to be suffering from the biggest corrections, whereas those in more affordable areas are seeing lower falls.

The biggest annual falls were in commuter towns in the South East such as Woking, where prices dropped by 2.3 per cent, Epsom, where prices fell by the same amount and Maidenhead where prices fell by 1.6 per cent.

Even after these corrections prices remained over £400,000, but in Epsom where prices had been highest, the annual drop of £11,490 was enough to bring average prices down to just below the £500,000 mark.

But more affordable coastal markets that are not such an easy commute away from the capital saw prices rise.

In Dover prices rose by 3.4 per cent to £246,991, in Hastings they increased by 2.9 per cent to £232,596 and in Shepway they climbed by 2.3 per cent to £259,617.

The South West showed a similar trend with more expensive markets seeing the lowest price increases and affordable locations witnessing stronger growth.

In Bath prices edged up by 0.3 per cent to £345,575, in the Cotswolds they rose by 0.7 per cent £365,630 and in Poole by 0.3 per cent to £307,667.

Meanwhile two areas where house prices are below the South West’s regional average of £265,571 saw much steeper increases.

In Taunton average prices rose 4.6 per cent to £225,549 and in Gloucester they were up by 3.2 per cent to £192,019.

Zoopla research and insight director Richard Donnell says: “The London housing market is coming to the end of what can be described as a three to four year repricing process where many areas have experienced small, single digit price falls.

“This is not surprising given the speed of price growth between 2010 and 2016.

“The year of peak sales activity in terms of actual recorded sales was 2014.

“Multiple tax changes and growing affordability pressures reduced demand, evidenced by a 25 per cent drop in sales between 2014 and 2018.

“Prices have been adjusting since 2016 which is more a result of market fundamentals than Brexit which we see as a compounding factor.”

Donnell says that the trends in London and southern England are part of the same unfolding housing cycle and that sales volumes across the South are down by 10 per cent since 2015.

“There remains plenty of demand for housing in Southern England but there are fewer buyers who are more cautious, seeking out value for money.”

He believes that market conditions will remain challenging over the rest of 2019.

Zoopla’s research team expects more southern markets to experience price falls until early 2020 when they see volumes increasing and prices beginning to recover.

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