London House Prices See Biggest December Drop in Six Years

 

Shoppers looking to capitalize on recent discounts and include a central London house purchase on their Christmas lists might want to hold off as experts predict further price cuts are coming. 

Average asking prices in London dropped 4.3%, or by £27,678 ($35,091), in December to £616,160 ($780,567), according to Rightmove, a U.K.-based property website. Prices have fallen in six of the past eight months.

While falls in asking prices are common at this quieter time of year, this month’s drop is the largest in December for six years, indicating ongoing weakness, the report said, especially in inner London and at the upper price brackets.

The decrease in asking prices was largely driven by London’s central boroughs, which are traditionally the most expensive. Asking prices there slid 6% to £784,620 ($994,642) and 2.4% in the outer boroughs to £503,519 ($638,329).

At the very top end of the market, a large chunk of which is in the center of London, prices tumbled 13.6% to £1.38 million ($1.74 million).

According to Rightmove, the trend of falling prices in central London will continue—and actually get worse—into the new year as demand at current price levels lags behind more plentiful supply. 

The site is forecasting that prices will fall by a further 5% in 2017 as the “price bubble continues to deflate” as a result of weakening demand amid higher stamp duty rates and continued Brexit-related uncertainty.

“Inner London’s higher-end markets require massive funds to secure a property compared to the comparatively modest average prices in outer London, and now also attract a much larger bill for stamp duty,” said Miles Shipside, housing market analyst at Rightmove.

“Buyers are being put off the really big-ticket purchases,” Mr. Shipside said. “While sterling’s depreciation has helped to make things more attractive, the pressing need to purchase because of rising prices has disappeared. We therefore predict further price falls.” 

In contrast, asking prices in more affordable areas of outer London are set to rise 3% in 2017 as buyers look for more space and value, according to Rightmove.