House prices slump as Docklands own credit crunch bites

03 September 2008

Mike Brooke

HOUSE prices in London’s East End have slumped by an average of £5,000 compared to 12 months ago as the credit crunch bites hard.

In some cases, prices have tumbled in Docklands by as much as £60,000 in just one year, according to one estate agent.

Property owners in Tower Hamlets are among London’s top three losers, after Wandsworth who saw the average value of their homes fall by £6,800 and Merton seeing their homes drop by £5,200.

Year on year, prices in both Tower Hamlets and neighbouring Hackney fell by 7.5 per cent, according to a survey by Hometrack this week.

Four London boroughs now have average prices below £200,000, including two in East London, Newham and Barking & Dagenham—that’s £100,000 less than the average price across London.

But things could get worse still before they even begin to recover, warns Hometrack.

Their research boss Richard Donnell said: “Sale prices are running at 10 per cent below ‘asking’ prices, which suggest sellers are still too optimistic about the value of their property.

“The gap between ‘sale’ and ‘asking’ prices a year ago was half that, at just five percent.”

Prices will tumble by as much as 15 per cent this year and continue falling next year and into 2010, some analysts forecast.

Once-booming areas such as Limehouse and the Isle of Dogs are now facing a typical drop of around 10 and 15 percent, according to Dockside Property Services in Canary Wharf, which is itself feeling the pinch.

It’s been even worse in places like Beckton, the ‘magnate’ for developers just 12 months ago ago, according to their area sales manager Daniel Betts.

“A one-bed property with garage a year ago would be on the market a couple of days and be snapped up for £195,000,” he says.

“Now it takes us three weeks to shift a similar property—but for only £135,000. That’s a £60,000 drop in 12 just months.

“We’re having to work much harder for the same cash, four or fives times the sales for the same commission.”

Many properties remain on the ‘shelf’ where sellers are reluctant to lower the ‘asking’ prices.

“But property owners who are more realistic with prices will be able to sell,” he added. “Prices are down by as much as 20 per cent.”

The agency is managing to survive without redundancies because of its lettings business. People moving to the area are renting rather than buying because of the credit crunch, it has found.

The irony is that now is the time to buy, when properties are at their lowest, although mortgages are harder to obtain.

It is now a buyers’ market—but for those with cash.