London housing market transaction volumes have plummeted, following a decline in rent prices and housing starts, according to think tank Centre for London.
The London Intelligence quarterly report says 20,000 were homes bought and sold in the capital in the quarter to August, representing a 23% drop on the previous year. It points to speculation that investors have shifted their focus to the North, resulting in a cooling market in London and the South.
While total deal volumes have dropped the report points out that transactions for detached houses, semi-detached house and terraced properties increased quarter on quarter by 15%, 23% and 13% respectively. In contrast the volume for flats, which forms the bulk of transactions, decreased by 9% against the previous quarter.
Decline in rents
The report also outlines an overall decline of 0.3% in private housing rent prices during the same period. There has been an average monthly decline of 0.1% in London, compared to an average monthly growth of 1.9% in the rest of England, since the start of the year.
However, actual rents paid in the capital have risen. These figures outline a growth of 1.9% in the three months, compared to the same time last year.
House prices
The Centre for London said there has been an average house price growth of 3.9% to £623,677 in Greater London in the year to August. This compares to a lower rate of change of 1.1% for the rest of England and Wales.
The Centre for London notes that the growth is “modest” in contrast to the “rapid growth that the housing market has become accustomed to. However, it notes that while political uncertainty may have dented buyer confidence, prime central London is showing signs of a rebound. Prices in West London increased by 13.8% in the year to August 2018, compared to a rise of 8.6% in outer West. In East London growth has been far lower, with an increase of 1.3% to £603,000 in the same period.
Housebuilding
The think tank points to local elections in May as an influential factor driving a slowdown in major schemes passed through planning committees in the second quarter of 2018. Just 122 large residential schemes were decided on, down 17% on the same period in 2017.
Housing completions in the year to June 2018 dropped below 23,000, and new starts dropped below 17,400. The report suggests the trend reflects a drop in supply, in light of economic uncertainty and reduced buyer demand.
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