Residential London review Q1 2020
As COVID-19 stalls sustained price growth in Greater London, we review recent data indicating already decelerating growth in high-value locations.
Values for London as a whole saw a year-on-year increase in Q1 2020 for the first time in several quarters, according to the latest Nationwide and ONS house price indices. These are shown in Figure 1 below. The Coronavirus pandemic appears to have stalled any chance of sustained price growth this year.
While the London average is useful, it hides a lot of variation across the boroughs. The charts below illustrate the wide range of performance across the capital’s different local markets, starting with annual change in house prices in Figure 2 below. Over the past year, the lower value boroughs have generally seen the most growth, with Hackney (average value ~£575k) top at 4.9%. The highest value borough, Kensington and Chelsea, saw the largest price falls, at -7.9%.
Over the medium term, the trend is even stronger, as shown in Figure 3 below. The borough with lowest average values, Barking and Dagenham, has seen the most growth over this period at 40%, with Kensington and Chelsea again lowest at -8%, plus a clear gradient between the two. The highest value markets have been hit by changes to SDLT and other taxes over this period, explaining some of the difference in performance.
Longer term – over 10 years – there has been no clear pattern, with relatively strong growth in all boroughs, as shown in Figure 4 below. Hammersmith and Fulham has seen the lowest growth over this period at 55%, with Waltham Forest highest at 105%.
Rents in London as a whole have been growing more slowly than across the rest of England, according to the ONS Index of Private Housing Rental Prices. Annual rental growth in the capital was 1.2% in March, compared to 1.6% in the rest of the country. Figure 5 below shows the two data series, with London seeing lower annual growth in every month since October 2016.
Rightmove and Zoopla reported similar trends in their Q1 2020 results, with the rest of the country seeing more growth than London, as shown in Table 2 below. On all measures, rental growth is running slightly below national wage growth, which was around 3% annual (before any impact on employment or earnings from the COVID-19 outbreak).
Table 2 Portal Rental Data, Q1 2020
|Average rent*||Annual change|
|Zoopla||UK ex. London||£735||+2.6%|
|Rightmove||UK ex. London||£815||+2.4%|
Source: Zoopla Rental Market Report, Rightmove Rental Trends Tracker*Note: Zoopla adjusts asking rent data to estimate achieved rents, Rightmove reports actual asking rents.