During 2007 and 2008 we had a severe property price crash, in 2010 we saw prices in some areas ‘bounce’ back slightly.
What happened next depended very much on where your property was in the UK.
Some places saw property prices continue to grow from 2010 and they are still growing now.
Some areas saw prices become as flat as a pancake, then start to rise in 2013 and 2014, some like Brighton and Hover seeing their average prices now above 2007/8 falls while others have recovered a little bit, but are still lower than they were.
Other areas have hardly seen any movement whatsoever for eight years, meaning that areas such as Liverpool and Bradford still see their ‘average prices’ nearly 30% lower than they were EIGHT years ago.
Why it’s important to know how long prices will fall for...
When property prices start to fall it normally goes hand in hand with an economic recession. This makes price falls doubly scary. On the one hand the value of your biggest asset is falling, your property and on the other it may well mean you have issues with your job or work.
What makes it even more scary is the daily headlines are horrific:-
The Guardian said: “House prices set to fall by further 12% in 2009”
The Telegraph:- UK house prices suffered record drop in 2008
And the problem with headlines is they very much influence buyers and sellers behaviour. If they indicate prices are falling, buyers hold off buying, which then means they fall further as desperate sellers reduce their prices until they secure a sale.
Although we can’t accurately predict how long prices will fall for, we can look back at history and see how long they have fallen for in the past.
And that’s what we have done for each of the 32 London Boroughs, download our results here, look at the blue columns on the RHS (link)
Summary of 32 London Borough price falls
Property prices fell for 18 to 20 months in the following boroughs and they also fell by 16-18% during these months:-
Havering; Hillingdon; Brent; Lambeth
The majority of boroughs (23 of them) fell for 13 to 17 months, with these boroughs falling for 17 months:-
Barnet; Redbridge; Merton; Southwark; Waltham Forest
Others which fell for just 13 months include:-
Hackney; Ealing; Haringey; Richmond upon Thames; Wandsworth
From a property prices falling perspective, the likes of Newham and Barking and Dagenham fell by the highest amounts (-22%) during this time while Hackney, typically one of London’s best performing boroughs, fell by a huge 21%.
London Boroughs which fell by less include the City of Westminster (-14%) and Southwark, Haringey and Ealing fell by 16% during these months.
The following boroughs though fell for the shortest period of time, just 12 months, with falls of 19-20%
Hounslow; Tower Hamlets; Kingston upon Thames;
While the two boroughs of Camden and Kensington and Chelsea fell for just nine and eight months respectively and they fell for 16-17%, some of the smallest falls.
So what we know is that when prices fall in London, depending on the borough they tend to fall for 8 months to 20 months, but the average is just over a year.
Why it’s important to know how long prices will rise fall
If you have an idea of how long prices might fall for, as a seller it can help you plan as to whether you continue to try and sell or if you prefer to rent the property out for a period of time and then sell when the market has recovered.
Knowing how long prices may fall for and by how much is also useful to those who want to buy into the market, investors or first time buyers, and although no-one will ever know when we have ‘hit’ the bottom of the market until some months or years afterwards, it does give you an idea of what to look for and when to consider buying.
It also helps take away the ‘fear’ that prices will continue to fall ‘forever’ and never recover as some people predicted during this time.