London home price cuts spread as market stagnates

Bloomberg

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 UK. 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 UK capital as applicants need to borrow more than banks are prepared to lend under rules set out by regulators in 2014.
The percentage of sellers cutting asking prices in January rose in all but two of the capital’s 33 boroughs compared with July, the month after the UK voted to leave the European Union, according to data compiled by real estate listings website Zoopla. Barking & Dagenham and Redbridge were the exceptions to the trend.
The largest average price cut was in Kensington & Chelsea, at 8.2 percent in January compared with 7.8 percent in July, Zoopla’s data shows. Westminster was second, at 7.7 percent, followed by Wandsworth, which includes the Battersea district, at 7.1 percent.
The Zoopla asking price figures come a day after the latest Bloomberg analysis of UK Land Registry data showed that sales volumes remain low and prices in many parts of the city are continuing to decline. Zoopla’s figures echo the story told by the Land Registry data, which are based on completed transactions.
Hounslow, the borough that includes the upscale Chiswick and Turnham Green districts, rose to third place in January, from 11th place in July, after the percentage of listings that had a reduction rose to 36.3 percent, from 26.8 percent.