Londoners hit as house prices fall

THE UK HOUSING market dropped back for the third month in a row in September, with London prices now also moving into the red.

Figures from Rightmove show that average asking prices across the UK dropped by 1.1 per cent to £229,767 compared with the previous month.

Prices have now fallen back by a total 3.4 per cent in the last three months, half way towards wiping out gains made in the first six months of the year. Asking prices are up by just 2.6 per cent over the past 12 months, a decline in real terms.

In London, the average asking price fell by 1.5 per cent to £390,768 this month. Prices are up just 2.1 per cent over the past year, a cut after adjusting for consumer price inflation.

The data comes after bleak figures which showed that retail sales unexpectedly dropped 0.5 per cent in August – triggering fears that high inflation, weak earnings growth, austerity measures and a looming VAT hike were threatening to derail a consumer recovery. Most economists believe that economic growth will be weaker – albeit still positive – in the third and fourth quarter of 2010.

The biggest London fall was in Hammersmith and Fulham, where prices dived by 8.3 per cent, while Tower Hamlets performed best, with a rise of three per cent.

Rightmove director Miles Shipside said: “The ‘double-dippers’ will be able to point to a clear downward trend, with new sellers dropping their asking prices for three months on the bounce. They can cite tough competition amongst sellers and agents struggling to find buyers for their record levels of unsold stock.”

But he emphasised that the data was not exclusively negative and that the figures could be a blip, with a recovery ahead. Shipside said: “Those seeing this as a short term autumn blip rather than the onset of a serious double-dip, will point out tentative signs of a reduction in new property coming to the market.

“This has resulted in average unsold stock per agent stabilising after six consecutive monthly rises.”

The lack of new housing stock – the lowest since April at 26,087 a week – is likely to increase competition in the run up to Christmas.

Rightmove said the reduced number of sellers, in what is traditionally a busy time of year, is probably down to finances and sentiment being at a low ebb. Conversely, interest rates are low enough that home owners at financial breaking point have been able to avoid forced sales.

Average UK asking prices DOWN 1.1% to £229,767 in September

Average UK asking prices DOWN 3.4% in past three months

London asking prices DOWN 1.5% to £390,768 in September