This report summarises key trends in London’s housing market, including prices, affordability, repossessions and new housing construction. The report draws on official statistics and some third party sources, and links in each case to the original source. Any queries regarding the data should in the first instance be addressed to the original source. While the data shown is generally the latest available, users should note that changes in the housing market can take time to show up in published data. The report was last updated on 12 January 2015. You can also find out more about the different sources of housing supply data that the Greater London Authority uses here.

SUMMARY

• Stronger economic growth has resumed in both London and the rest of the country, while the unemployment rate has fallen sharply in the last six months.
• Lending to first time buyers has grown rapidly in the last year.
• Average London house prices grew by 18% in the last year, and now stand at £508,000.
• Expectations of future house price growth have risen in the last two months.
• The annual growth rate of average private sector rents in London increased to 1.5% , while rent levels are around twice the national average.
• Average interest rates have fallen for new variable-rate mortgages but risen for fixed-rate mortgages, while the monthly costs of owner occupation remain relatively low for those who manage to buy.
• Mortgage arrears in the UK have fallen over the last year, as have mortgage possession orders, but landlord possession orders have risen.
• New housing orders and new starts have both risen, while completions have started to fall again.
• Annualised growth in housebuilding materials costs has stabilised at 2%.
  
  Economic growth: Real Gross Value Added (GVA) growth (year on year), London and the rest of UK

• London’s economic output (measured as ‘Gross Value Added’) grew by 3.5% in real terms in the year to March 2014, compared to 2.9% growth in the rest of the UK
• Source: Experian data provided to GLAUnemployment: Quarterly unemployment rate, London and England

• London’s unemployment rate dropped sharply to 6.3% in Q3 2014, down from 9.0% in Q3 2013 and the lowest rate since 2007.
• The rate in England as a whole also fell, from 7.7% in Q3 2013 to 6.0% in Q3 2014. The gap in unemployment rates between London and England is now at its lowest point since current data began in 1992.
• Source: ONS/NOMIS Labour Market StatisticsMortgage lending: Four-quarter running total of new mortgage loans by type, London Home movers, First time buyers

• The number of new mortgages advanced to first time buyers in London rose to 50,600 in the year to September 2014, the highest annualised total since early 2008.
• The level of lending to home owners has been relatively steady, with 38,900 new loans in the last year.
• Source: CML Mortgage Lending StatisticsPrices: Mix-adjusted average house price and annual change by region, October 2014

• Average house prices in London rose by 17.2% in the year to October, down from a peak rate of 20.1% in May.
• Average prices in England as a whole grew 10.8% in the last year.
• London’s average house price in September was £504,000, down from £514,000 in August but still £164,000 more than the next most expensive region, the South East.
• Source: ONS House Price Index
  
  Prices: Quarterly change in average London house prices – comparison of indices Halifax

• After all three of the main house price indices showed very strong quarterly growth (seasonally adjusted) in average London prices in Q2 2014, the Nationwide index showed a sharp drop to quarterly growth of just 0.9% in Q3, with the Halifax index recording growth of 7% and ONS 3%.
• Sources: ONS House Price Index (seasonally adjusted by GLA); Nationwide; HalifaxPrice Expectations: Balance of price change expectations over next 12 months in London

• Expectations of future house price fell slightly again in London in December after rising slightly in November, but remain strongly positive.
• A value of figures indicates that survey respondents (around 1,500 homeowners each month) on balance expect house prices to increase over the next 12 months.
• Source: Knight Frank / Markit House Price Sentiment Index

• Average private rents in London rose 1.5% in the year to September 2014, according to the Office for National Statistic’s index of private rents, compared to a 0.8% increase in the rest of England.
• Rent increases according to this new index are less than suggested by other sources, in large part because the ONS index includes ongoing as opposed to just new tenancies. The ONS index is also mix-adjusted to take account of changes in the types of homes being rented.
• Source: ONS experimental index of private rentsRents: Median monthly rents by region and number of bedrooms

• Average private sector rents in London are more than twice the national average for all property sizes
• Source: Valuation Office Agency private rental market statisticsAverage effective mortgage interest rates

• Average interest rates were generally stable in September 2014, with new variable-rate mortgages at 2.5%, average fixed rates at 3.3% and average variable rates for outstanding loans at 3%.
• Source: Bank of EnglandAffordability: Average deposit requirement and interest repayments as % of income for first time buyers

• Q3 2014 saw the first substantial dip in average deposit requirements for first time buyers in London after several years of stability at 25%.
• High deposit rates are a barrier to owner occupation but for those who already own mortgage costs remain relatively low at 21% of income.
• Source: CML Mortgage Lending StatisticsArrears: Proportion of mortgages in arrears, by percentage of total balance in arrears

• The proportion of mortgage accounts in the UK in possession or in arrears of more than 2.5% of total balance fell to 1.27% in Q2 2014, down from 1.33% in Q1
• The proportion of accounts in the deepest arrears (10% or more) remains relatively high at 0.32%.
• Source: FCA Mortgage Lending StatisticsAnnualised mortgage and landlord possession claims and repossessions by county court bailiffs

• In the year to September 2014 there were 16,453 homes repossessed by county court bailiffs in London, 94% of which were rented properties repossessed by social or private landlords
• 1,021 mortgaged homes in London were repossessed in the last year, down 28% from the previous year, while 15,432 rented homes were repossessed, up 6%. There were also 5,906 claims for mortgage possession and 50,699 claims for landlord possession in the last year, but not all claims end in possession
• Source: Ministry of Justice, Mortgage and landlord possession statisticsNew orders: New housing orders, London (constant Q2 2013prices, four quarter running total)

 

• There were around £5.4bn in orders for new housing construction in London in the year to June 2014, down from the previous quarter but well above historic trends
• The £5.4bn total comprised £4.0bn of orders for private housing and £1.3bn for housing association and public housing
• It should be noted that ONS changed the source of the data in 2013, which may account for some of the increase seen in the last quarter. However, ONS have not revised any of the historic data in response to the change
• Source: ONS, New orders in the construction industryStarts: New house building starts in London

• Annualised new build housing starts in London fell to 20,080 in the year to September 2014, but were still 10% higher than in the year to September 2013.
• Source: DCLG Housing Live Table 253aCompletions: New house building completions in London

• There were 19,710 new build completions in London in year to September 2014, up 11% from the year to September 2013.
• Source: DCLG Housing Live Table 253a

• After rising over the last year, annualised growth in housebuilding materials prices has stabilised at 2%.
• Source: BIS, Building materials and components: monthly statistics