London has waved goodbye to the stratospheric house price rises of previous years but don’t expect huge asking price cuts in 2018.
Asking prices in 2018 are tipped to rise at the slowest rate in six years, with Rightmove predicting growth of one per cent across England and Wales next year.
This is an even slower rate of annual growth than the 1.2 per cent recorded this year, and is the lowest year-on-year increase since the 0.8 per cent rise recorded in 2011.
The average asking price in England and Wales is down by more than £8,000 on the previous ;month, dropping to £302,865 in December 2017.
Miles Shipside, Rightmove director and housing market analyst said: “Home owners have had a good run, with every year since 2011 seeing a rise in the price of property coming to market, and the national average rise over those six years being 30.9 per cent, equivalent to 4.6 per cent per year.
“2018 will continue the 2017 trend by being a real mixed bag of different price pressures both up and down, but the net result is that we forecast another year of a slowing in the pace of price rises,” he says.
What’s happening in London?
The average asking price in London fell by 3.7 per cent in December to £605,203, a drop of more than £23,000 on the November average.
December is traditionally a quiet month for the London property market, with fewer properties listed for sale in the run up to Christmas. This year is no exception with the property portal recording 94,266 properties for sale in November, dropping to 77,731 properties listed this month.
However, Rightmove says the picture underlying this traditional seasonal drop is of a market still coming to terms with prices re-adjusting downwards after several years of rises.
Rightmove predicts an overall drop of two per cent in new seller asking prices across London in 2018 following the 1.8 per cent fall recorded this year.
This would push the average asking price in London down by £12,100 to £593,000 in 2018.
Who will benefit from price changes in 2018?
“Economic and political uncertainty tend to weigh more heavily on the capital given the large number of residents involved either directly or indirectly, and given the substantial costs of moving up to the middle or higher echelons of the housing ladder, many buyers hang back unless presented with a bargain,” said Shipside.
However, the overall forecast is significantly weighed down by the most expensive sector of the market, with average asking prices reaching £1,329,916 despite a significant seasonal fall in December.
Asking prices for homes at the top of the ladder are tipped to drop by a further four per cent (£53,200) next year, after a 3.7 per cent drop in 2017, with sellers forced to adjust their expectations to attract buyers.
Meanwhile, stamp duty savings for first-time buyers announced in the Budget last month are tipped to boost demand in 2018. First-time buyer homes are expected to fall in price by one per cent, with the average saving worth £4,588, close to the maximum £5,000 stamp duty reduction available.
Stamp duty and the cost of moving will continue to present challenges in the second-stepper market.
Nick Leeming, Chairman at Jackson-Stops said: “Punitive stamp duty levels and political and economic uncertainty are weighing in on the residential property market.
“The escalating cost of moving house means home owners are more likely to stay put and renovate next year, when they might otherwise have moved, particularly with the interest rate rise rendering mortgage deals less favourable.”