Signs that the London property market is cooling

Prices for top-end London properties are falling fast. And there are signs it could extend to the rest of the London property market, too, says Merryn Somerset Webb.

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The Northern Line extension to Battersea is fuelling construction in Nine Elms

I wrote late last week about the huge number of signals suggesting that it really is time for the London property market to start to see major price falls. One of the signals I mentioned was the fast-rising supply of homes that those working in central London can reasonably live in.

By that I mean properties actually in London, but also those within reasonable commuting distance of it. That's a thought neatly backed up by an article in the Sunday Times over the weekend. The headline was "The biggest rail expansion since Victorian Times may be the answer to the housing crisis in the capital."

Some £100bn is currently being invested into the overground and underground rail networks in London. There's Crossrail; there's the extension of the Northern Line down to Battersea; the Thameslink programme; and the HS2 line to Birmingham.

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All these new railways do two things. First, they make existing housing stock along their lines more commutable (analysts tell the Sunday Times that one million extra homes will be commutable once all the work is done). And second, they encourage builders to put up new homes along them.

According to Savills there are some 230,000 new properties on the way directly as a result of railway development with 100,000 along the new commuter routes and 130,000 around the city's stations. Think 10,000 around Kings Cross, Paddington and London Bridge.

TfL and Network Rail (one of the country's biggest landowners) are also getting in on the developer game. The latter has shortlisted some 300 acres of land for building some of it in super-central areas such as Southwark (where MoneyWeek's not very glamorous offices are) and Earls Court and that's just in the first phase. We have often noted here that demand creates its own supply (hooray for markets), and so it is in London.

Still, if you are looking for a deal, you might not have to wait until all the construction is done. In my original piece I pointed to various other signals (from the collapsing wealth of Russian oligarchs, to the political war on wealth, and the fact that prices are already falling) and John Stepek tells me he is putting a list of the new signals he has noticed in the magazine this week. The return of liar loans is his favourite. Mine is a statistic I didn't see last week: according to Helen Davies, writing in the Sunday Times, "for the first time in more than a decade there are more people leaving the capital than entering it".

But prices are already falling fast. They are down 14% in Kensington & Chelsea over the last year. I have also received several emails about distressed sales in prime central London in the last week. One is for a flat that has been cut in price from £2,650,000 to £1,999,999 a fall of over 30%. "They have to sell", says the agent. Clearly.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.