House prices fall in London and rest of UK

Julian Harris
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<a href=""; target="_blank">House prices</a> have dropped for the first time this year, according to a well-regarded Rightmove index released this morning.

Prices fell 1.6 per cent across the UK in July, with even London’s houses experiencing a 1.4 per cent dip, the figures showed.

In June, the average residential property in the capital hit an all time asking price high of £438,622. Yet this month almost £6,000 has been shed from the average asking price, as summer sellers are forced to attract the attention of “holiday-distracted” buyers.

Despite the fall in July, London’s prices remain 5.8 per cent higher for the year so far.

And London’s prices were still 2.5 per cent higher this month than at the same time last year. However across the UK as a whole, prices were up just 0.1 per cent annualised, according to Rightmove’s figures.

The average house throughout the country is priced at £236,597.

Seven out of 10 residential properties put on the market this year remain unsold, Rightmove said, “indicating that many equity poor sellers are unwilling or unable to reduce their prices further.”

While the number of new sellers is down 12 per cent this month compared to one year ago, potentially holding up prices, the drop in prices over the last four years has shattered several housing market myths, Rightmove said.

“Retail price inflation outstripped property prices by 14 per cent over the last four years, improving buyer affordability but undermining perception of bricks and mortar as a hedge against inflation,” the report stated.

While London’s market has significantly outperformed the rest of the country in 2011, today’s report suggests that the price spikes could level out.

“Agents report more offers below the asking price,” said Rightmove’s Miles Shipside, “so this month’s drop is an early warning that prices may be testing their upper limits”.

The survey also suggests that prices should be set at realistic levels when a property is first put on the market, at least for internet listing. The first week attracts nearly twice the number of average hits (100) as the second week (55), Rightmove’s research found.