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London Housing Market Plunges Amid Economic Woes
25 Mar
Summary
- London house prices dropped 1.7% to £556,000 in January.
- Flats and inner London areas saw the steepest price declines.
- London's unemployment rate is the highest regionally at 7.6%.
London's housing market has seen a significant downturn, with prices falling for the sixth month in a row. In the year to January, the average house price in the capital dropped 1.7% to £556,000. This decline is the steepest since February 2024.
The weakness is attributed to an affordability squeeze, with many buyers seeking value outside the M25. Flats and inner London areas experienced the sharpest annual contractions, with some expensive boroughs seeing double-digit drops.
Economic headwinds also affect London, with its unemployment rate at 7.6% for the three months to December, the highest of any region. Rental price growth is also at its weakest, with only 1.7% annual increase.
Factors like taxation changes for landlords and second-home owners, coupled with rising mortgage rates, are expected to intensify pressure on the market. The average two-year fixed mortgage rate has climbed to 5.56%, its highest since September 2024.
