House prices in London are falling
In mid-December the Land Registry revealed its latest data on housing prices. These showed that average prices had fallen in five London boroughs in October, up from three in September and just one borough in August. The largest fall, in Kensington and Chelsea, was almost 5 per cent.
Across all of London, prices fell by 1.2 per cent in October, the largest monthly fall recorded since 2011. The Evening Standard reported the story with a reassuring quote from an estate agent saying that: “The industry will really start to stutter to a halt as Christmas approaches, so any panic over falling house prices should be taken with a pinch of salt.” However, another estate agent broke ranks to say that sale volumes were now “critically low.”
An even more dramatic story emerged on 22nd December, with Yahoo reporting: “House prices in parts of central London have collapsed by as much as 13 per cent over the last year, according to new figures from property consultancy and advisory Knight Frank.” This one was illustrated by a three-dimensional map of the capital showing the central boroughs sinking beneath the river Thames. But again there was a semi-reassuring quote suggesting the falls would “bottom out” in 2017, with a rider about political uncertainty.
How did the government react to these events? It re-released details of a scheme it had first announced two years ago to provide some funding to allow more private building on brown field sites and a few “garden villages” all of which is in jeopardy with the fall in housing prices spread out from the capital as they have tended to do in the past. Falling prices make housing more affordable, but they also make solutions to the housing crisis based on ‘nudging’ the private market far less likely to work.
For a discussion of these issues on BBC Radio 2 listen here:
or read more – Prospect Magazine Blog, January 4th 2017 or a lot more on the housing crisis in “All That is Solid”