London house prices have fallen 1.2 per cent in the last year in a sign that the brief upturn in the market is now slowly beginning to fade.
According to figures by Halifax, homes across the south remain under the greatest pressure from falling prices – with homes in the South East now costing £385k representing a -1.6 per cent annual decline.
In the capital the average price of a home now costs £536k, down -1.2 per cent annually.
“Property prices have now fallen by about £3,000 over the last 12 months and are down around £7,500 from the peak in August,” Kim Kinnaird, director, Halifax Mortgages, said.
“But prices are still £5,000 up since the end of last year, and £25,000 above the level of two years ago,” she added.
The average home has tipped into negative territory over the past year, at -1 per cent, according to the building society.
Despite a surge in sales in early spring, the market has struggled as a new economic environment make its presence felt.
Upward momentum on house prices has largely been bruised by the Bank of England’s decision to hike interest rates to 4.5 per cent, which in turn led lenders to raise rates on mortgages.
Since then approvals on mortgages have further dwindled and buyer confidence has been shattered.
It comes as figures from the Bank of England show that net mortgage approvals for house purchases fell from 51,500 in March to 48,700 in April..
‘Lenders continue to increase their mortgage rates, pulling products with little or no notice in response partly to funding costs and in response to what other lenders are doing,” Mark Harris, chief executive of mortgage broker SPF Private Clients, said.
“This will inevitably impact what buyers can afford and in some cases they may put decisions on hold until the situation irmproves”
He added: ’Swap rates, which underpin the pricing of fixed-rate mortgages, have settled since the inflation news sent them soaring. If this continues, we would expect mortgage pricing to also become less volatile.”