London house prices fall despite market’s coronavirus recovery
London house prices continued to fall in July, new data revealed today, despite an increase in demand from new buyers.
Respondents to the Royal Institution of Chartered Surveyors (RICS) UK Residential Survey also do not expect this demand to continue, as wider government support measures begin to be phased out later in the year.
Buyers and sellers
Almost half of survey respondents said they saw an increase in new buyers returning to the London housing market in July, up from minus 20 per cent in May and 43 per cent in June — marking the second consecutive report in which demand has rebounded.
The capital has now seen an uptick in the number of sales being agreed for the second month in a row, as 34 per cent of respondents said they had seen a rise in people agreeing purchases.
RICS said this is indicative of a strong pick-up in transaction levels, after the hefty declines reported a few months ago. The positive turn was also mirrored across the rest of the UK.
In the short term, almost a fifth of respondents said they expect completed sales in London to continue to rise in the next three months.
However within the next year, as the furlough scheme and other support measures come to an end, only seven per cent of respondents expect sales to improve.
London house prices
Despite the capital experiencing a flurry in sales activity, RICS said London house prices remain negative — the only region across the UK to still experience prices falling.
A net balance of minus 10 per cent of respondents reported a decline in London house prices during July, though this was a major improvement on the minus 54 per cent reading posted in June.
A net balance of minus 15 per cent of contributors expect London house prices to fall in the coming three months, and some minus 21 per cent over the next 12 months.
“It is interesting that there remains rather more caution about the medium term outlook with the macro environment, job losses and the ending or tapering of government support measures for the sector expected to take their toll,” said RICS chief economist Simon Rubinsohn.
“Significantly, some contributors are now even referencing the possibility of a boom followed by a bust.”