Latest house price data shows Greenwich borough is seeing some of the biggest house price falls in London.
Greenwich saw the third biggest monthly fall out of 33 London authorities at 2.6% whilst annually prices were down 8.7%:
This data is from LSL, who along with the Land Registry include some of the most comprehensive sources of information when compiling reports.
LSL are quicker to pick up changes and trends with new build prices compared to the Land Registry, and that is likely what is leading the way with these falls.
It also measures more transactions than indexes such as Halifax or Nationwide.
New home bust?
Greenwich is in the top five authorities in London for new build homes, which is what has brought so much income to the authority from the New Homes Bonus and Section 106 / Community Infrastrucure Levy.
Yet in recent months the new build market has seen some upheaval. Many homes are bought off-plan by overseas buyers who only pay the initial deposit and then hope to “flip on”, aka sell, before completion for a quick profit.
This has backfired and there are question marks over the ability of these “buyers” to ever complete beyond the initial deposit. As some run away, price falls pick up which LSL are capturing before other indexes.
This is one factor with some major housebuilders announcing big cuts in future building plans despite the severe need for homes.
With prices so high, and in particular ratios of earnings-to-house prices now putting even small flats beyond people earning average or above wages, developers have become ever more reliant on overseas money and speculation or props such as Help to Buy, which they used to increase asking prices pushing affordability even further away from many.
The market is fundamentally flawed when domestic demand cannot sustain building despite huge need.
All those props and schemes had a shelf life, and it could well be that the limit has been reached. Add in wider economic issues, Brexit and the rest and price drops shouldn’t be a great surprise.
The issue is what happens now. Does the Government and Bank of England introduce more schemes to hold up prices and fuel generational inequality, or stand back?
There’s only so long they can intervene and continue to open the credit taps. The more they do, the more people forced into expensive private rents, and those people generally don’t vote Tory.