London: London house prices fell for the first time in almost two years this month as declining demand led to a weakening of the property market across Britain, Hometrack said.
The survey of real-estate agents showed values in the capital dropped 0.1 per cent, the first decrease since November 2012, and further 'modest' declines are likely in the coming months, the property-research company said in a report today. National prices stagnated, bringing to an end 19 months of increases.
The survey chimes with other reports showing the London housing market is slowing sharply after values surged by more than 25 per cent in a year. Hometrack cited a tightening of loan criteria and the prospect of a Bank of England rate increase.
"Buyer uncertainty is growing in the face of a possible interest-rate rise, a general election on the horizon and recent warnings of a house-price bubble," said Richard Donnell, director of research at Hometrack. "Played out against a backdrop of tougher mortgage affordability checks and limits on high loan-to-income lending, higher-value postcodes of inner London are clearly being impacted."
While momentum cooled across Britain, London is "experiencing a pronounced slowdown" and was the only region to post a fall in values this month, Hometrack said. Fewer sellers in London and southeast England are achieving their asking prices, it said.
Pent-up demand for housing following the recession has now receded, though there is also little evidence of supply opening up, Donnell said.
"Although the lead indicators suggest buyers will start to gain the upper hand, there are many home owners who don't need to sell and won't bother unless it's financially beneficial to do so," he said. "The net result is a likely drop-off in activity in the coming months."
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