The average house price in London is affected by a lot of things, but the main factor right now is the uncertainty caused by the coronavirus pandemic. Property prices in London have stagnated for the second quarter of 2020 as virus concerns keep people from buying and selling property.
The house price index published by Halifax showed house prices have dropped for the fourth month in a row. This means that house prices have dropped by 0.9% overall during the second quarter of the year.
Some areas saw sharper drops in average prices than others. The average house price in London remained relatively the same. The average house in the capital costs just over £500,000, according to figures from Halifax.
The second quarter of the year was characterized by the housing market being hit with opposing forces, according to some experts. There were both positive and negative factors affecting the market.
One positive factor was that some property transactions were put on hold in March when the coronavirus pandemic began to take hold. Some of those transactions went through as restrictions on the housing market were lifted in May. People who have managed to retain their income and save money during lockdown have also started buying new homes.
Despite these positive signs, there are signs that buyers are cautious due to the potential economic impact of coronavirus. Many agents suggest that the property market is currently going through a temporary respite thanks to support from the government and the pent-up demand for new houses.
One positive for the housing market is the cut in stamp duty announced by Chancellor Rishi Sunak. Sunak announced that the threshold for stamp duty would be increased to £500,000 in an attempt to encourage younger buyers to take their first step on the property ladder. The cut in stamp duty means that it will be cheaper to buy property on the lower and middle end of the market.
It’s not all good news for the housing market, though, as experts believe that house prices are still likely to fall at some point. The pandemic is expected to cause unemployment issues as the government slowly winds down support schemes such as furloughing workers. The lack of financial security means people are less likely to make a large purchase, such as a house.
In one more piece of good news for first-time buyers – and the London property market as a whole – affordability improved a little over the second quarter. The average price-to-earnings ratio for the UK slipped to 6.18 during the second quarter. The rate is still twice that in London, at 12, but any improvement to affordability is welcome news for anyone considering buying a house.
The City of London itself remains the most expensive borough in London. The prices in the central district are up to 1.5 times as much as the southeast, and triple that of the northeast, the cheapest part of London to live.