A prominent housing market analyst is warning that in 14 years of studying prices and transactions he has never seen the current level of disparity between London and the regions.
The capital’s market is on its way to a “severe correction” according to Doug Shephard, director of the property website Home. Meanwhile it’s business as normal - or even better than normal - in many other parts of the country, he says.
“Over the last six months, London sales stock levels have increased by 50 per cent. In a normal market this would be disquieting but not a huge concern as vendors could take their properties off the market and rent them out instead” explains Shephard in his latest market snapshot.
He continues: “However, the bad news for sellers is that the London rental market is already plagued by oversupply and rents are falling, especially in the central boroughs. Until February this year, rising rents supported residential property values in the capital: now they are dragging them down.”
The Home Asking Price Index - the basis of the website’s monthly market analyses - is calculated using a weighting system using around 500,000 house prices representing the majority of property for sale on the open market in the UK at any given time.
Shephard predicts that to make London’s plight worse, some landlords are likely to off-load their properties shortly, exacerbating the glut.
“Meanwhile” he says, ”it’s almost business as usual up north. Unlike London, northern regions have pretty much picked up where they left off pre-pandemic, reverting to their price growth trends with supply remaining moderate … The extraordinary diversity of the UK’s property market will no doubt help to buffer the negative effects of the impending disaster in the urban London sales market.”
In statistical terms, Home’s market snapshot says the supply of new sales instructions for mainland UK is up 32 per cent last month compared to September 2019, while in London the increase in supply over the year is no less than 87 per cent “and now risks a severe market correction”.
However, across England and Wales “despite surging supply the current stock count remains lower than in October 2019 by 4.6 per cent.”