The first fall in London house prices for many months has wiped out gains recorded in the first half of the year, the latest real estate index to be published shows.
Throughout the UK the fledgling house price recovery is now on the back burner as all the indices published in the last few weeks show little or no growth and analysts warn that further price falls are now inevitable.
London home sellers cut £17,000 off their asking prices on average in August, wiping out gains recorded in the first half of the year, the report from Rightmove shows. Asking prices in the capital fell 4.1% on the month to an average of £405,058, the biggest drop in two years and returns values to levels seen in January.
Rightmove’s data show the London boroughs of Wandsworth and Brent led declines in the capital, falling 6.2%. Newham was the best performer, slipping 1.2% percent, while the Kensington and Chelsea district fell 1.7%.
Overall prices across England and Wales fell 1.7%, the report also shows. The West Midlands saw the biggest fall in asking prices, down 4.4%, while prices rose in the North and East Midlands, by 2.6% and 1.5% respectively.
It comes on the back of reports from the Nationwide Building Society and Halifax also signals that the UK’s housing recovery is faltering. The Royal Institution of Chartered Surveyors recently said its members reported falling prices for the first time in a year last month.
While the latest Cluttons Residential Property Forecast says that price growth exceeded expectations over the first half of 2010 and a period of stability is now expected. The annual rate of growth in 2010 is 10% according to the international property consultancy.
‘We predict price growth of around 4% over the year, with house prices expected to flatten out from this point forth. A marginal price increase of just 2% is expected during 2011, as steady rises in interest rates and negligible growth in employment serve to hold values back, despite positive headline growth in the economy,’ said Andrew Stanford, head of Cluttons’ residential professional division.
The report says that central London house prices have slowed to a standstill in recent months and have now stabilised at around 11% below their 2007 peak. ‘We are forecasting price growth of 5% this year, followed by steady growth of 3% in 2011 with buyers expected to prove reluctant to bid up prices dramatically over the period,’ explained Stanford.