London house prices falling at fastest rate for nine years

London house prices are falling at their fastest rate for nine years, latest figures revealed today, as an official report blamed Brexit for stagnation in the capital’s property market.

The average value of a home in London stood at £484,926 in July, down 0.74 per cent on a year previously, according to Office for National Statistics data. This sliced off around £2,500 per home.

Prices have not dropped more rapidly since September 2009 when they fell 3.25 per cent while the market reeled from the impact of the financial crisis.

A separate one-off ONS analysis of the London property market concluded that its slowdown over the past two years may have been because the capital was “particularly affected by a fall in net EU migration and wider uncertainty following the Brexit referendum result”.

It also pointed to higher rates of stamp duty on more expensive homes hitting London harder than other UK areas.

The fall came as it was revealed that the rate of inflation jumped to 2.7 per cent in August, meaning shop prices again outstripped rises in wages. Economists in part blamed a slump in the value of the pound during the summer.

Meanwhile, London business chiefs warned of a £20 billion funding gap in finance needed to achieve the Government’s target of 300,000 new homes a year.

London First, which represents more than 200 firms, published a report saying £8.6 billion more was needed in the capital, a 65 per cent increase, to meet housing needs.

The study by economic consultancy Volterra suggested a “mixed economy” solution of £2.6 billion of public money and £19.3 billion of private sector cash to plug the gap.

Jasmine Whitbread, chief executive of London First, said: “The Government needs to face up to some hard choices about how to unlock a further £20 billion worth of investment if it’s ever going to turn its rhetoric into reality.”

Communities Secretary James Brokenshire insisted the Government was confident it was on the “trajectory” towards the 300,000 target by mid-2020, having reached 217,000 in 2017/18.

At the National Housing Federation Summit in London today, Theresa May announced an extra £2 billion for social housing from 2022, with the aim of allowing housing associations and town halls to plan long-term. Mrs May also highlighted the “stigma” attached to social housing and insisted that tenants are “not second-rate citizens”.