Fears that the housing market slowdown could lead to widespread falls in property prices deepened on Wednesday after Land Registry data showed the long-exuberant London market was weaker than any other region in October.
According to the Land Registry’s index, house prices in England and Wales rose just 0.1 per cent last month, bringing the annual rate of house price inflation to 8.1 per cent, the lowest level this year.
In London, the index showed a fall of 0.6 per cent in house prices, the first monthly decline since April 2006 and the largest in more than two years. The figures are the first sign that the capital’s property market could be turning after a period of rampant price growth.
The figures are preliminary and the regional breakdown of monthly movements, based on a small proportion of total transactions, has regularly been revised by about half a percentage point in recent months.
“The fall in London house prices …did not even reverse the previous month’s rise, and could yet turn out to be simply noise rather than a new trend,” said Ed Stansfield, property economist at Capital Economics. “Even so, the slowdown in house price inflation over the past three months has been most marked in London.”
Even after the decline, London’s annual rate of house price inflation remains easily the highest in the country at 14.7 per cent. But sustained price falls in the capital would fuel concerns over the possible extent of a national housing slowdown, since house price movements in London are often ahead of trends in the rest of the country.
“If this is reflected in London it’s worrying for the market,” said Jeremy Leaf of the Royal Institution of Chartered Surveyors.
If October’s movement were confirmed as a trend, it would be bad news for those who expected London property to prove more resilient than other areas.
Richard Petty, a partner at property consultants Drivers Jonas, said the Land Registry figures seemed “the reverse of our experience”. He expected prices to hold up in the capital’s established residential areas.
John King, surveyor at Quinton Scott, said sellers in Wimbledon and Kingston were now “very rarely” achieving their asking prices. “Family houses around £1m to £1.5m are getting viewings that would have led to offers earlier this year,” he said.
Charles Puxley, surveyor at Jackson Stops in Chelsea, said prices for properties valued about £3m were down 10 per cent from the peaks seen earlier this year, although the top of the market fuelled by expatriate demand remained unaffected.
Greater caution over pricing could be a rational readjustment after the frenzied price inflation and sealed bid auctions seen at the market’s peak earlier this year.
Tim Le Blanc Smith, surveyor at John D Wood, said price reductions were widespread, but that “a lot were overpriced in the beginning and are coming down to the correct asking price”.
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