London House Prices ‘No Longer Rising’

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House prices have stopped rising in London, the latest data from the Royal Institution of Chartered Surveyors (RICS) has indicated.

The RICS UK Residential Market Survey for December 2020 revealed house prices were still rising in most parts of the UK, but London was an exception.

This suggests the capital may be becoming a buyers’ market, which means the first few months of 2021 could be a good time to contact Forest Hill estate agents.

In London, only seven per cent more surveyors witnessed an increase in prices than a fall during December, falling from a net balance of 13 per cent in November. By contrast, the positive balance across the rest of the country was 65 per cent, maintaining a stable level of growth that has now persisted for four months.

Across the UK as a whole, the levels of sales, new enquiries and instructions were still increasing in December, but at a slower rate than November.

A net balance of 15 per cent of surveyors saw an increase in new buyer enquiries. While still in positive territory, this was down from 26 per cent in November and represented the fifth successive monthly decline.

There was a seven per cent positive balance in the number of appraisals, which was down from November and substantially down on the summer months, but higher than the December 2019 figure. Similarly, a net balance of 18 per cent reported an increase in agreed sales, again down from November.

Sales expectations were gloomier, with a net figure of 22 per cent expecting sales to decline in the near term due to the new restrictions, while six per cent more respondents expected sales to fall rather than rise over the course of 2021.

As ever, the circumstances of the current market are influenced heavily by the pandemic, but the data is unlikely to be affected by the emergence of the faster-spreading new variant of Covid-19, as it was only identified a week before Christmas, with the holiday season traditionally being the quietest time of year for transactions.

A key issue will be how the UK deals with the pandemic in the months ahead. A combination of a lockdown that drives down the R number, warmer weather and the roll-out of vaccines may change matters for the better. Against that, the approaching end of the stamp duty holiday will remove one incentive for buyers.

Reflecting on the data, RICS chief economist Simon Rubinsohn suggested the new lockdown had heavily influenced sentiment.

However, he noted, in the longer run the prevailing view of RICS members “is that the uplift in prices over the past year will be sustained, for good or ill, as the macro picture gradually improves on the back of the rollout of the Covid vaccination programme”.

Overall, 2020 saw a 7.3 per cent rise in house prices, the highest rate in six years, according to the latest figures from Nationwide.

Like RICS, Nationwide said the fortunes of the market in 2021 will depend on factors such as the impact of the vaccine roll-out and other measures to suppress the virus, as well as government action to support the economy.