Property sales in London are being delayed and prices dipping after Donald Trump’s Iran war pushed up mortgage rates, according to experts.
The average length of time to sell a home in the capital is nearly a week longer than would have been expected, 41 days rather than 35, according to property site Zoopla.
The delay is far bigger than any other region, with the nationwide average being just a day, and the figure for the South East two days.
Mortgage rates jumped after Trump’s Middle East conflict triggered a global economic crisis, with inflation rise fears and the biggest ever oil supply shock as Iran closed the Strait of Hormuz.
The cost of home loans has fallen slightly but the Iran conflict’s economic fallout is expected to further feed through into the capital’s housing market in coming months.
Adam French, Head of Consumer Finance at Moneyfactscompare.co.uk, said: “The recent dip in average mortgage rates offers some relief, but they remain significantly higher than at the start of March, adding around £1,700 to the cost of a typical mortgage.
“With funding costs still volatile and limited room for meaningful further cuts, the affordability squeeze is likely to continue feeding through into the housing market over the coming months.
He added: “While it clearly presents a challenge for many borrowers, it can also shift market dynamics in unexpected ways.
“In Outer London and other first-time buyer-heavy markets, higher borrowing costs are cooling demand and extending sales times.
“That is increasingly leading to softer pricing and, in some cases, greater scope for negotiation for those still in a position to buy.”
With housing set to be a key issue at the May local elections, the Government was highlighting new rights for renters.
But Housing Secretary Steve Reed ruled out a rent freeze for private renters, many of who pay high rents to often live in homes in poor condition in London, after Rachel Reeves appeared to leave open the door to such a move.
The Chancellor said the Government would do “everything we can” to support tenants amid reports that she was considering a one-year private sector rent freeze to help ease the cost-of-living burden caused by the Iran war.
Mr Reed told Times Radio: “We are doing everything to help people in private rented that's why we're bringing in the renters rights reforms this Friday, which is the biggest increase in rights for people who rent their home that we've seen for a generation.
“It bans no fault evictions. It bans unfair rent increases. It allows people to have the right to request a pet in their home as well.
“But we're not looking at rent controls, and the reason we're not doing that is when this was introduced by the Scottish Government in Scotland, it ended up with rents going up much higher and the amount of homes that were available to rent going down.”
However, the Government and London Mayor Sir Sadiq Khan have been accused of failing to do enough to tackle London’s housing crisis, with new projects having almost ground to a halt in some areas.
Mr Reed insisted that an agreement reached with Sir Sadiq, reducing the number of affordable homes needed for some developments, was now kicking in and would boost the number of new flats and houses.
He also highlighted reforms to the Right to Buy, including increasing the minimum eligibility period from three to ten years before tenants can apply to buy their home.
There will also be a 35-year new build exemption period so new social homes cannot be sold under Right to Buy for 35 years after they are built.
“I want people to be able to buy their own home but not at the expense of other families who are left living on the streets or in temporary accommodation, so we are trying to balance it,” Mr Reed told LBC Radio.
