London’s property market is set to be hit by a post-Brexit slowdown after a surge in new listings and a dip in sales, new research shows.
According to Hometrack, the headwinds facing the London market ahead of the vote have resulted in rising supply and relatively fewer sales, pointing to slower house price growth in the months ahead.
There has been a relative fall in sales in London with 8% fewer homes sold per month in the last three months compared to the 12 month average.
For all cities in England and Wales, excluding London, new listings have grown 10% faster than the 12 month average, rising to over 15% in London.
The latest Hometrack UK Cities House Price index reveals that city level house price inflation in the year to June was 10.2% – the same level as May – but still ahead of 6.9% growth seen a year ago.
The fastest growing city in the UK was Bristol, with a year-on-year growth rate of 14.7%.
However, house price inflation in London and in other cities in the south of England, such as Cambridge, Southampton and Bournemouth started to slow in the run-up to the referendum.
Meanwhile, large cities in northern parts of the UK such as Glasgow, Manchester, Liverpool and Leeds logged strong growth in the last quarter on the back of more affordable prices, lower interest rates, improving local economies and higher yields making purchases attractive to investors.
Hometrack said sales volumes in regional cities appear to have held up over the EU referendum period.
Richard Donnell, insight director at Hometrack, said: “The headwinds that were facing the London market in the lead up to the EU referendum have intensified on the back of the vote to leave and are resulting in slower sales rates. It is still early days, and seasonal factors also need to be considered but the growth in new listings and slower sales points to slower price growth in the months ahead.
“This growth in supply reflects a mix of new homes filtering through from London’s expanded development pipeline, investors looking to take capital gains, or selling to de-leverage their investments following the reduction in tax relief on mortgage payments for buy-to let investors.
“In contrast, in many large regional cities, sales appear to have held up thanks to a combination of much better housing affordability, improving economic growth and record low mortgage rates helping to stimulate demand.”
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