House prices fall in London

Last Modified: 20 Aug 2007
By: Bridgid Nzekwu

For the first time in a year London - the driving force behind the housing boom - sees a price drop. Is a crash in view?

We've seen evidence in recent months from Hometrack, the Royal Institution of Charted Surveyors, Nationwide and Halifax that the housing market is slowing down.

Now the property website Rightmove has revealed compelling evidence that rocketing prices are a thing of the past.

The last time prices rose by less than one per cent for four consecutive months was January of last year.

Rightmove's figures look at the asking price of homes on the market in England and Wales. They show that, overall, prices have risen by just 0.6 per cent this month. The biggest gains were in the north west where the market rose by two per cent. The biggest drop in prices was in the west midlands - a fall of 2.2 per cent.

The most striking finding is that prices have fallen in London for the first time in a year; the cost of properties in the capital dropped 0.1 per cent.

Agents are now saying that, given the turmoil in the markets and less money in the city, London's market is probably past its best - and this in turn will affect the rest of the market.

Some analysts point out that the market always slows in the summer, and that these figures are possibly quite normal for August. Indeed estate agents always expect a slower market in the summer. But what's significant this time is that prices have fallen in London - one of main driving forces behind national price rises.

Agents are now saying that, given the turmoil in the markets and less money in the city, London's market is probably past its best - and this in turn will affect the rest of the market.

Today's house price figures could mean interest rates stay on hold for the time being. Rightmove are saying we may at last see annual house price rises matching annual salary increases at around three to four per cent.