London Property Price Increases are Starting to Slow Down

by : Andrew Regan

Although London now ranks above Monte Carlo in terms of property prices, recent figures released by estate agents Rightmove show that London house prices rose at their slowest rate in five months, with the cost of a home falling in more than half of the United Kingdom's capital's boroughs.

While other regions across the country saw the average house price rise by 0.8 per cent in June, property prices in London rose by 0.7 per cent in comparison - half the rate that had been seen in May, prompting experts to predict a drop in property prices over the next few months.

A nationwide property boom, led by demand from rich foreigners and bankers in the city might be reaching its peak as interest rates reach a six-year high deter homebuyers with record debts. With another interest rate increase looming, it is widely expected by property analysts that another increase may crimp price growth.

The slowdown saw the cost of a home fall in seventeen of London's thirty-two boroughs, with Southwark, an area south of London's financial district showing the largest level of decline with prices falling 2.8 per cent. Hounslow, close to Heathrow Airport showed the next biggest decline with a 2.4 per cent drop.

However, property prices within London's upmarket boroughs continued to increase, with property in Kensington and Chelsea, areas popular with bankers, footballers and Hollywood celebrities recording gains of 3.4 per cent on the month and a staggering 73 per cent compared to the previous year with an average price of ?1.4 million. Furthermore, the average time a property remained on the market rose to 69 days from 65 days in May. The average asking price in London is still 23 per cent higher than a year ago, with the prices rising from ?315,224 to ?387,898.

Property prices across the U.K roise by 13.2 percent in June to an average cost of ?239,317, climbing in seven out of ten regions. The West Midlands showed the greatest level of gain with a 5.8 per cent increase, while East Anglia, the North-West and Yorkshire and Humberside all recorded negative growth. The increase in property values has highlighted the growing divide between homeowners and those not on the property ladder, with more than four4 million people expecting never to be able to own their own home.