London house prices post first annual rise in more than a year
HOUSE prices in London rose for the first time in more than a year, a sign that its property market is beginning to shake off the impact of higher interest rates.
Average prices in the UK capital climbed 0.6 per cent in June compared with a year ago to £523,000 (S$883,656), the fastest growth since May 2023, the Office for National Statistics said on Wednesday (Aug 14).
It showed London’s property market recovery gathering momentum after it suffered some of the sharpest declines in prices following the surge in mortgage rates. Economists are expecting the property market to make further gains after the Bank of England started to cut interest rates earlier this month.
It pushed up the average price in London to its highest in nine months, and was the second straight month-on-month increase. However, prices in the capital are still 3.5 per cent below their peak almost two years ago.
Tom Bill, head of UK residential research at Knight Frank, said that August “may prove to be a turning point” for the property market after the BOE reduced rates from a 16-year high.
“The first rate cut in more than four years and lower-than-expected inflation numbers should boost demand this autumn and we expect average prices to rise by 3 per cent in 2024,” he said.
A NEWSLETTER FOR YOU
Tuesday, 12 pm
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
The official data confirms the stronger picture coming out of industry indicators in recent months after an easing in mortgage rates. The official data usually lags gauges from Halifax and Nationwide Building Society, which have shown prices rising in July.
While mortgage rates remain much higher than before inflation took off, borrowing costs have come down again after creeping higher since the start of 2024. The average two-year fixed mortgage rate has edged down to 5.66 per cent, down from around 6 per cent earlier in the summer, according to Moneyfacts.
The ONS said that UK-wide prices were up 2.7 per cent year-on-year, unchanged from May, and flat compared with the previous month.
“The outlook for mortgage rates should boost demand in the coming months,” said Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics. “We think the trend will gain further ground as mortgage rates fall and real incomes rise.”
Separate data showed that a fall in private rental price inflation stalled in July. Rents were up 8.6 per cent across the UK compared with a year ago and 9.7 per cent in London, both unchanged from the previous month. BLOOMBERG
Share with us your feedback on BT's products and services
