Over a third of homes across Southern England are at risk of suffering price falls as the housing market slowdown extends from London.
That’s the view of Zoopla, which is warning that the ripple-out price falls could last until the middle of next year.
The portal’s research team, using its Hometrack valuation data, says 36 per cent of homes in Southern England are in property markets experiencing house price falls.
However, it suggests that price falls these are small and limited to higher value areas, and it says the drops will be short lived compared to London - in the wider south, the falls will last around a year before reducing in size or stopping completely in mid-2020.
The average house price for the south as a whole stands at £323,910, up a marginal 0.6 per cent over the last year. But these regional averages hide a wide variation in growth at a localised level according to Hometrack.
Of the 36 per cent suffering price falls across Southern England, most are seeing drops of less than 2.5 per cent on an annual basis.
The report finds a clear link between house prices and whether markets are registering a softening in prices. In broad terms high value markets are more likely to be registering price falls than lower value, more affordable areas.
For example, in the South East region, the weakest annual growth can be seen in the likes of Woking (down 2.3 per cent in the past year), Epsom (down 2.3 per cent), Basingstoke (down 1.9 per cent) and Maidenhead (-1.6 per cent) – all archetypal commuter towns. Other than Basingstoke, the average house price in these areas is well over £400,000.
Whereas Dover (down 3.4% per cent), Hastings (down 2.9 per cent) and Shepway (down 2.3 per cent) on the coast, lower value areas which are less commutable to London, are performing relatively well.
In the South West, again, it is generally the higher value areas where price increases are smallest. Prime examples are Bath where the average price is £345,575 and prices are up just 0.3 per cent annually; the Cotswolds £365,630 (up 0.7 per cent) and Poole £307,667 (up 0.3 per cent annually).
The lowest value areas which still have further scope for price growth such as Gloucester and Taunton are experiencing annual house price growth of 3.2 per cent and 4.6 per cent respectively and house prices are well below the regional average.
“The London housing market is coming to the end of what can be described as a three to four year repricing process where many areas have experienced small, single digit price falls. This is not surprising given the speed of price growth between 2010 and 2016” explains Richard Donnell, Research and Insight Director at Zoopla.
“The year of peak sales activity in terms of actual recorded sales was 2014. Multiple tax changes and growing affordability pressures reduced demand, evidenced by a 25 per cent drop in sales between 2014 and 2018. Prices have been adjusting since 2016 which is more a result of market fundamentals than Brexit which we see as a compounding factor.
“Late last year we reached the peak in terms of proportion of local markets experiencing small annual house price falls. Since then the proportion of markets registering declines has fallen, as the three year re-pricing process approaches the end phase.”