How London became the property market’s black sheep

{"text":[[{"start":8.018,"text":"Georgia Dean and her husband recently took their property off the market."}],[{"start":12.521,"text":"He bought the two-bedroom flat in Haggerston, east London, for £470,000 in 2014. But the mortgage rate was due to rise from 1.6 per cent to 4.8 per cent: renting the flat out no longer made financial sense."}],[{"start":28.073,"text":"They listed it in June for £650,000, a below-inflation increase. An estate agent told them “no one would sniff around if the price stayed above £600,000”, said Dean, who works in product at a tech start-up."}],[{"start":42.028,"text":"In the two months before the couple pulled the listing, it attracted only two viewings."}],[{"start":46.812,"text":"“My husband got sold the dream of getting on the property ladder,” Dean said. “If he had put that money into the stock market, it would have been a much better result.”"}],[{"start":54.96,"text":"For decades, London property seemed like a one-way bet. No longer."}],[{"start":62,"text":"In recent months, luxury homes have sold at huge discounts. Other properties have sat unsold. Across the city, the market is sufficiently lifeless that developers claim that building new homes is barely profitable."}],[{"start":72.64,"text":"House prices in the capital fell 3.3 per cent in the year to July, the 11th straight month of declines, according to official data, even before adjusting for inflation."}],[{"start":83.6,"text":"The number of properties for sale in London is at a 16-year high, and buyers’ enquiries are 9 per cent lower than last year, according to property portal Rightmove."}],[{"start":null,"text":"

"}],[{"start":92.51,"text":"It is the latest phase of a dramatic turnaround in fortunes."}],[{"start":96.083,"text":"A decade ago, the average London home cost more than 3.6 times the average in Greater Manchester. That multiple has now fallen to 2.3 times."}],[{"start":106.46,"text":"While cities such as Tokyo, Madrid, Sydney and Paris have seen prices of prime homes rise sharply since 2016, London’s market has gone sharply in the opposite direction."}],[{"start":117.165,"text":"Even New York, which has seen a small drop in the value of high-end properties, does not come close."}],[{"start":null,"text":""}],[{"start":122.557,"text":"London’s sluggishness has a variety of causes: high prices, expensive mortgages and the rise of remote working that has enabled many office employees to move out of the capital."}],[{"start":132.888,"text":"High service charges weighed on flat prices, while investor uncertainty also dragged on the top end of the market. Prices for flats in the capital are at the same level as they were a decade ago."}],[{"start":144.803,"text":"Tom Bill, head of UK residential research at estate agents Knight Frank, said: “The main driver, really, has been affordability. Buyers are just more squeezed in London than other parts of the country.”"}],[{"start":155.84,"text":"Across the UK, average house prices in 2026 are 39 per cent above their 2016 level, while prices in north-west England have risen 59 per cent with similar rates in Wales. In London, the increase has been just 9.8 per cent."}],[{"start":171.44,"text":"The capital “pulled away so strongly after the financial crisis in terms of prices that at some point that game of catch-up was going to happen”, Bill said."}],[{"start":null,"text":""}],[{"start":180.8,"text":"Much of London’s recent weakness is concentrated in its most expensive areas."}],[{"start":186,"text":"In inner London, average property prices fell 6.8 per cent in the year to July to about £624,000. Westminster’s prices are at their lowest level since 2013."}],[{"start":198.475,"text":"By contrast, in outer London, which includes boroughs such as Havering and Waltham Forest, prices have increased 17 per cent over the past decade."}],[{"start":206.791,"text":"“The divergence in values between central London and outer London has narrowed to the point where you don’t have to be ultra-wealthy to own a home in Chelsea,” said Ollie Marshall, director of buying agency Prime Purchase."}],[{"start":218.668,"text":"“We’re essentially seeing a repatriation of central London assets that were held by international foreigners to UK buyers.”"}],[{"start":225.2,"text":"A big part of the story is government policy."}],[{"start":228.145,"text":"Stricter mortgage regulation and tax changes affecting property investors began to bite in the mid-2010s, just as London homes had become exceptionally expensive relative to incomes."}],[{"start":239.453,"text":"More recent tax changes, including to inheritance tax and the ‘non-dom’ regime, have particularly affected central London, according to experts."}],[{"start":247.385,"text":"Savills said nearly half its agents reported that overseas buyer demand in London fell in the first half of the year."}],[{"start":253.986,"text":"International buyers “at the moment are sitting on their hands”, said Jonathan Hopper, chief executive of property finder Garrington Group."}],[{"start":261.04,"text":"Another factor stymying transactions is stamp duty, the tax levied on homebuyers. Critics argue that the duty gums up the market as people avoid moving or downsizing."}],[{"start":null,"text":""}],[{"start":273.76,"text":"In addition, following Brexit and Covid, London’s share of the UK population has been shrinking."}],[{"start":279.04,"text":"The post-pandemic desire for space means there is now less demand for flats, which make up most of the city’s housing stock."}],[{"start":286.171,"text":"Larger three-bedroom properties with outside space and without the service charge “are absolutely fine”, said Amy Reynolds, head of sales at Richmond estate agency Antony Roberts. “If it’s a flat with a very high service charge, that’s a challenge,” she added."}],[{"start":301.76,"text":"The average London flat or maisonette costs the same in cash terms as in 2016, while prices for houses have risen approximately 20 per cent."}],[{"start":null,"text":""}],[{"start":309.6,"text":"Another factor is the exodus of buy-to-let buyers, pushed by regulation and mortgage rates."}],[{"start":316,"text":"“There are fewer investors in the market because of things like the Renters’ Rights Act, because being a landlord is tougher than it was several years ago,” said Knight Frank’s Bill."}],[{"start":325.2,"text":"Falling prices were expected to help allow more buyers on to the property ladder. But prices still stretch beyond what many can afford, and mortgage rate increases are exacerbating the situation."}],[{"start":336.64,"text":"First-time buyers in London spend about 54 per cent of their take-home pay on mortgage payments, well above the 33 per cent for the UK, Nationwide data shows."}],[{"start":346.56,"text":"“There are plenty of people who would like to buy, but mortgage rates around 5 per cent, high moving costs and affordability constraints limit what they can actually pay,” said Richard Donnell, executive director at listing site Zoopla."}],[{"start":null,"text":""}],[{"start":360.8,"text":"Many owners of expensive flats, particularly in inner London, have been reluctant to sell at a loss."}],[{"start":364.56,"text":"But the recent market falls suggest that at least some are accepting that the capital’s property ladder has toppled over."}],[{"start":372.48,"text":"“Sellers can’t wait forever, and more are finally having to accept the market-clearing price,” said Donnell."}],[{"start":378.64,"text":"The realisation has been sudden for Sophie King and her husband, who are trying to upsize from a three-bedroom maisonette in Kennington to a house in the less central Zone 3."}],[{"start":387.68,"text":"Last year they put their flat on the market for £675,000 and received an offer of £660,000. They did not proceed owing to unfinished building works."}],[{"start":399.44,"text":"“We put it back on the market for the same price [in July] and we’ve had to drop it twice because the engagement has been almost non-existent,” King said."}],[{"start":408.32,"text":"The asking price currently stands at £625,000. For a cash or chain-free buyer, “we’d be more than open to considering cheekier offers”, she added."}],[{"start":423.67,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1790578067_2215.mp3"}