Year on year house price growth was below 3 per cent for the three months up to and including April 2017.  This is the first time growth rates have dropped below 3 per cent since January 2012.

Tube and bus journeys

The number of underground journeys made in London – often cited as a proxy for economic activity – shows a year on year rise of 0.3 per cent for the four week period ending 27 May 2017. The recent trend in tube usage is relatively flat over the last few years, staying around 12 journeys per passenger per four-week period. This suggests the past growth in ridership in the longer run has been predominantly driven by increased population, rather than by more intense use by individuals.

A look at bus ridership, however, reveals a striking decline. The number of bus journeys per person has remained below 20 for most of the year (for each four week period), down from a high point of 22.3 in 2010. The total number of journeys has remained constant compared to the same period last year, but this masks the longer term decline. Research suggests the decline in bus ridership is, among other things, linked to increased journey times resulting from congestion and the arrival of alternative transport options, including the Night Tube, cycle superhighways and private hire vehicles.

House prices

The data presented here is based on actual property transaction information from the Land Registry, compiled by Acadata, covering cash buyers and purchasers with a mortgage. We have used mean data rather than median data because mean prices are mix-adjusted at a London level, allowing for easier comparison over time. Our borough figures are unadjusted.

Mean house prices in London are still growing, but the rate in growth is slowing and is now outpaced by growth in the rest of the country.

Year on year growth in London house prices has been slowing since the end of last year, having peaked at 13.7 per cent in March 2016. At the end of April 2017, the annualised growth rate had been below 3 per cent for three months – the first time growth rates have dropped below 3 per cent since January 2012. Mean price data tends to be distorted by higher price movements meaning that these changes are likely to disproportionately reflect the cooling off at the top-end of London’s housing market, linked to 2016’s increase in Stamp Duty Land Tax for second homes, Brexit and the uncertain political climate.

Housing transactions, which have been at relatively low levels since the recession, have experienced a slight slowdown in recent months. This follows the recent spike in March 2016, the month before the Stamp Duty changes were introduced.

As Figure 14 shows, changes to the rate of growth in mean house prices are not the same across the capital, suggesting a differentiation in performance at sub market levels. London’s super-prime and prime areas saw a sharp drop in year on year growth immediately after the EU referendum, though appear to have recovered quickly thereafter. However, London’s secondary or ‘peri prime’ markets, including boroughs like Hackney, Islington and Wandsworth have experienced significant cooling. Finally, the more affordable outer London boroughs continue to show strong price growth.

Rental Price Index

London’s private rental market is showing signs of cooling. Year-on-year growth in average rents dropped below 2 per cent in March this year and in May fell to 1.7 per cent – the lowest rate of growth since the end of 2010.

Rents in London are now rising more slowly than in England as a whole. This recent slowdown in growth saw inflation exceeding average rent increases for the first time since November 2011.

Pipelines, starts and completions

Data from the Department for Communities and Local Government on planning applications and housebuilding (starts and completions) presents a mixed picture for the capital.

Construction started on over 5,000 dwellings in the three months to March this year, while almost 7,000 were completed. Figures for starts were higher than in the middle of last year, but are still well below the peak reached in the first quarter of 2015. However, the number of completions was the highest it has been since Q1 2012 and the second highest on record.

Rolling annual figures suggest completions are on an upward trajectory, but are obviously contingent on past start rates and considering these dropped recently, we can expect a slowdown in in the near future.

Starts and completions figures only count new build properties and therefore do not fully represent the net change in housing stock – though they are the most significant source of new supply. The next issue of The London Intelligence will assess data from the London Plan 2016/17 Annual Monitoring Review in relation to borough-level targets.

Planning applications statistics for housing in the capital show that planning decisions taken rose 4.5 per cent in Q1 2017 compared to the same period last year. However the number of permissions granted fell 1.3 per cent. The longer term trend indicates a rising number of decisions taken over the last few years, but the number granted is not rising at the same rate .