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House prices in London are falling at the fastest rate since the depths of the recession nearly a decade ago, with the capital’s most expensive areas experiencing the biggest falls.
Acadata released a report Monday showing the median price fell to $820,000 in January, a 2.6% annual decline. That was the biggest drop since August 2009.
London will be the weakest U.K. market over the next five years because a decade of high house prices means it is more vulnerable to political and economic uncertainty, rising interest rates and mortgage restrictions, said Lucian Cook, director of residential research at Savills Plc.
Weakness in the capital’s most expensive property sector in recent years, partly due to tax changes, is spreading to other parts of the city and across the southeast. London house prices fell 0.8% in January alone, according to Acadata, which publishes regional data with a one-month lag. That suggests the weakness seen for much of last year is continuing into 2018.
Simon Aldous, a director at Savills, said in a survey published last week by the Royal Institution of Chartered Surveyors that business had been slow in “many” offices since the start of the year, although some central locations had seen an increase in transactions. James Gubbins, a partner at Dauntons in Pimlico, said in the survey that homes were typically being offered 10% below the asking price.
London’s most expensive boroughs have suffered the biggest falls over the past 12 months, with the biggest single fall coming in Wandsworth, which has seen a sharp increase in the number of expensive flats being built that Londoners don’t want or can’t afford.
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