The housing market in the South East saw £5bn wiped from its value last year, as house prices slumped in areas of limited affordability and low levels of development.
It was the only region that dropped in value, against a combined increase of £107bn in all other regions, according to analysis from Savills.
Lawrence Bowles, senior research analyst at Savills, said: “House price falls have rippled out of London into the South East.
“Performance has been weakest in those markets where affordability is most stretched, which are often those areas contributing most to the region’s total housing value.”
The UK housing market surged to £7.4tn in 2019, up from £4.6tn a decade earlier.
London and the South East have seen the bulk of value growth over the past decade, with 51% of the £2.74tn uptick concentrated in these regions.
Some 87% of growth during this period was attributed to value increases in existing homes, with the remainder coming from new development.
But growth has tailed off in recent years, with the combined values resulting in a £0.6bn decline last year.
This compares with large increases in the North West (£23bn), the West Midlands (£13bn) and Yorkshire & the Humber (£13bn).
“London and the South account for almost two-thirds of the nation’s housing value, 63 per cent, but the rest of the country is catching up,” said Bowles. “The North and the Midlands accounted for the majority of growth in the value of housing stock last year, thanks to faster house price growth and more development.”
New homes accounted for 40% of the value uplift in 2019, with 60% focused on existing stock.
However, Savills pointed out that declines in the South East are levelling off.
“New housing is helping to mitigate weaker pricing,” said Bowles. “We’re predicting that values will stabilise in 2020, with a return to growth in 2021.”
In its five-year residential predictions, Savills forecasts that the value of housing in the South East will increase by 10.9% by 2024.
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