London Property Prices Rise Unexpectedly Amid Wider National Dip

Asking prices for homes newly listed on the market in London have seen a surprise increase of 2.5% in the past month, according to data from property portal Rightmove. This rise in the capital contrasts with a broader national trend where overall asking prices dipped by 0.1% during the same period. Inner London experienced a more significant increase, with prices up by 3.9%.

This upward movement in London comes after a subdued summer, where asking prices across the capital fell by 6% in July and August. The recent spike is attributed in part to sellers hoping to capitalize on buyers eager to move before the Christmas holiday season. Marc von Grundherr, director at Benham and Reeves estate agents in London, noted an "enough is enough" sentiment among some sellers who believe London property remains a strong asset and are unwilling to accept prices below their perceived value, especially if they have no immediate need to sell.

Meanwhile, sellers in more affordable regions of the country have opted for lower asking prices. The North East saw a 2% decrease, Scotland experienced a 1.9% fall, and the North West recorded a 0.6% reduction. Across Great Britain as a whole, new asking prices remain 1.7% lower than they were a year ago.

The increase in mortgage rates is cited as a significant factor affecting buyer budgets and market activity. Payments on new mortgages have risen by approximately £250 since February, influenced by inflation concerns and interest rate dynamics. This has led to a slowdown in more price-sensitive property markets that had previously shown resilience.

Colleen Babcock, a property expert at Rightmove, stated that the rapid rise in mortgage rates is beginning to impact affordability, even in areas with lower property values. "We're now seeing mortgage rate rises feed through to seller pricing in many of the cheaper parts of Great Britain, where prices had been more resilient this year," she said.

The overall market activity reflects these pressures. Rightmove's data indicates that the number of agreed sales is 8% lower than a year ago, and the number of potential buyers contacting agents has decreased by 9%. The total number of homes available for sale is at its highest level for this time of year since 2014.

Despite the uptick in London's asking prices, Rightmove's indicators suggest that some sellers may be overly optimistic. The portal found that 38% of homes are having their prices reduced, and it takes an average of 78 days, or 11 weeks, to get an offer accepted on a property.