"The trends in London and Southern England are all part and parcel of the unfolding housing cycle."
Zoopla says that although the 'London effect' is rippling out to the South, the proportion of markets experiencing falls is lower than in London and the decline in house prices is expected to be less protracted.
Zoopla believes that by the second half of 2020, the scale of price falls will be much lower as the current slowdown is "small and limited to higher value areas".
Its research shows that although more than a third of markets are experiencing house price falls across Southern England, in the vast majority of cases the level of price falls is less than 2.5%.
Additionally, high value markets are more likely to be registering price falls than lower value, more affordable areas.
Zoopla’s research team expects more markets to experience price falls, peaking in H1 2020 and then slowing. Residential sales volumes in Southern England have fallen 10% since 2015.
Richard Donnell, research and insight director at Zoopla, commented: “The London housing market is coming to the end of what can be described as a three to four year repricing process where many areas have experienced small, single digit price falls. This is not surprising given the speed of price growth between 2010 and 2016. The year of peak sales activity in terms of actual recorded sales was 2014. Multiple tax changes and growing affordability pressures reduced demand, evidenced by a 25% drop in sales between 2014 and 2018. Prices have been adjusting since 2016 which is more a result of market fundamentals than Brexit which we see as a compounding factor.
“Late last year we reached the peak in terms of proportion of local markets experiencing small annual house price falls. Since then the proportion of markets registering declines has fallen, as the three year re-pricing process approaches the end phase.
“The trends in London and Southern England are all part and parcel of the unfolding housing cycle. There remains plenty of demand for housing in Southern England but there are fewer buyers who are more cautious, seeking out value for money. For homeowners entering the market the key to securing a sale is to be realistic on pricing based on the profile of demand for homes in the local market. Our analysis shows how trends vary within regions and all local markets have their differences. Would be sellers considering selling should speak to a good local agent with their finger on the pulse of the local market to get a true view of demand and the right price to achieve a sale as market conditions look set to remain challenging over the rest of 2019.”
