London House Price Expectations Hit Lowest Level Since 2023

The Royal Institution of Chartered Surveyors reported that estate agents' expectations for London house prices in July fell to minus 23, marking the lowest level since October 2023. This decline highlights a deepening property market malaise in the UK capital, where house prices are double the national average. While national price expectations remain slightly positive, London continues to trail.

The downturn is driven by elevated borrowing costs, with two-year fixed mortgage rates averaging 5.62%. These rates disproportionately affect London buyers who require larger loans. Market sentiment is further weighed down by geopolitical instability following conflicts involving Iran and uncertainty regarding potential tax changes under Prime Minister Keir Starmer and Chancellor of the Exchequer John Healey.

Despite the slump in price expectations, sales expectations for the next 12 months have risen to their most positive level since February. Chief Economist Simon Rubinsohn noted that the combination of geopolitics, the domestic political climate, and the cost of mortgage finance continue to impact the market.