Four in five London homes shed value as mortgage costs soar

London's property market has experienced a significant decline in home values, with 85% of homes losing value over the past year, according to property portal Zoopla. This figure is much higher than the 35% decline seen in the UK as a whole. The soaring mortgage costs, driven by the Iran war, have had a profound impact on London's housing market, leading to a decrease in home values and falling demand.

The average home in the capital is now worth £5,400 less than a year ago, while house prices in the northwest are £6,600 higher than the national average.

Prospective homeowners are facing challenges due to stamp duty, which can force them to reduce their asking prices as buyers cannot afford the tax burden. Property builders, including Berkeley, Bellway, and Barratt Redrow, have urged the government to abolish stamp duty for first-time buyers to stimulate the housing market. Extending the two per cent stamp duty band could save home movers up to £7,500, while similar measures for first-time buyers could save up to £6,000 per transaction.

In an attempt to boost the housing market, former Chancellor Andy Burnham revived George Osborne's Help to Buy scheme, which offers equity loans to help first-time buyers afford a deposit. While housebuilders welcomed this program, property experts expressed doubts that it would be sufficient to address the market's woes. The mortgage rate surge, combined with rising build costs, has made construction less viable, leading to a slowdown in price growth.

Housebuilders have warned that the housing market is becoming increasingly localized, making it difficult for the government to intervene effectively.