House price falls reach London boroughs

Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Local Government

An increasing number of London postcodes are now seeing house price falls, while away from the capital, there is evidence to suggest some bottoming out of prices, according to analysts.

Hometrack’s survey of 1,500 agents and surveyors across the country shows that house prices have fallen for the first time in seven months declining by -0.1% over July with evidence suggesting that the housing markets of London and the South East are starting to slow as demand weakens and supply rises.

Price falls in the capital are primarily being seen in outer London where domestic demand is slowing as sentiment weakens and affordability pressures bite. A similar pattern is being seen in the South East where prices were down across 35% of the region in July - above the national average.

Away from London and the South East, above average falls have resulted in prices slowing to a level where sales can take place without the need for large discounts, says Hometrack. This, it adds, suggests some bottoming out of prices in these regions which have seen larger price falls than Southern England.

The survey showed that prices fell across eight out of 10 regions in July – in the North East by as much as 0.5%.

London was the only region to register a price increase in July, up 0.1%, but the rate of growth has slowed. The number of postcodes in the capital registering prices falls has started to increase although overall there are still more areas posting rises than falls in July.

Richard Donnell, director of research at Hometrack, said: “House prices are particularly sensitive to changes in levels of demand and during the first four months of the year there was a strong rise in the number of buyers registering with agents - especially in Southern England - and with this came price rises. Now, however, demand is starting to falter across the board. The seasonal downturn has begun and this combined with a weakening economy is impacting on demand for housing.

“Weaker demand is to be expected over the summer months but compared to previous years, the seasonal slowdown has started earlier and developed more rapidly than in previous years. This reflects growing concern over the UK’s economy and the deepening Eurozone crisis.”

Last week, Land Registry data for June put the average house price at £161,777.