London is turning into a buyer’s market for houses and apartments as values rise at the slowest pace in six years and vendors are forced to cut asking prices to achieve sales.
Prices in the U.K. capital rose less than 2 percent year-on-year in December to 488,400 pounds ($686,000), the smallest increase since October 2011, according to researcher Hometrack. And the gap between asking prices and achieved values has widened eightfold in just three years as affordability issues put off potential buyers.
“Asking prices tend to act as the shock absorber to softer pricing as demand weakens,” said Richard Donnell, insight director at Hometrack. “However, once discounts get close to 10 percent, this is when falls in headline prices start to occur.”
Discounts already reached that level in some areas of central London, while for the capital as a whole, vendors cut prices by an average of 4 percent to get deals away, according to data from Hometrack’s parent company, ZPG Plc. It’s quite a contrast to the boom years of London’s housing market, when demand was so hot that the city became infamous for gazumping — when a seller ditches a verbal offer to take more money from elsewhere.
Other findings of Hometrack’s U.K. real estate report include:
- London prices rose an average 1.8 percent in December from a year earlier, offsetting robust growth elsewhere in the country
- In large regional cities including Manchester and Birmingham, the market is increasingly skewed toward sellers, not buyers
- Prices fell, though, in Oxford, Cambridge and Aberdeen because of “weaker demand and economic factors.”