London House Prices Coming Under Pressure

More London home sellers are having to cut the asking price of their homes, and they’re offering deeper discounts as political uncertainty and high values dampen demand.

“Price cuts seen in prime central London in the immediate aftermath of Brexit are now filtering through to outer boroughs,” said Savills Plc residential research director Lucian Cook. “Affordability issues are now a problem after a decade of house-price growth, and buyers are finding they increasingly come up against mortgage-lending limits.”

London home prices have surged about 86 percent since 2009, meaning it now costs buyers 14.2 times their annual gross salary to purchase a property, the highest level on record and more than double the rate for the U.K. as a whole, according to Hometrack. As a result, the number of mortgages advanced to first-time buyers in London has dropped 12 percent in the two years through September, data compiled by the Council of Mortgage Lenders show. That’s impacting boroughs on the fringes of the U.K. capital as applicants need to borrow more than banks are prepared to lend under rules set out by regulators in 2014.

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.