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Year ends with property sliding in Greater London

The December real-time property report from Rightmove.co.uk shows house prices now falling in Greater London, while the North, Yorkshire & Humberside and East Anglia are rising. Other parts of the country are almost static.

Average asking prices for Greater London, which almost touched a quarter of a million in late October, have now fallen back to £241,358 – a decline of 3.5% in about six weeks.

Prices in the capital have dropped back to their levels of late May, led down by big falls in expensive boroughs such as Kensington & Chelsea (-14.4% over the quarter) and Westminster (-12.5% over the quarter). An average property in Kensington & Chelsea has fallen by a whopping £62,000 over the past three months – the price of an average flat in the North of England.

However, prices in other, cheaper, London boroughs continued to soar this month, notably in Enfield and Ealing, Islington and Newham.

Nationally, asking prices rose over the past four weeks by just 0.6%, to £156,084, a year-on-year rise of 22.1%, significantly lower than the major lenders' most recent figures.

This difference can be explained by the fact that Rightmove's data:

• Includes a representative sample of high value properties (where price weakness has been most pronounced).
• Has little regional bias (the North has performed more strongly than the South).
• Has picked up declining asking prices in many areas over the past six weeks (which have not yet registered on the Halifax and Nationwide statistics).

Rightmove also highlights a sharp decline in activity in the housing market with fewer properties coming onto the market and a marked reduction in registered applicants and viewings. New instructions were running at an estimated 44,000 per week in early September and have fallen progressively since then, to around 28,000 in early December. This downward trend is set to continue in the run-up to Christmas and New Year.

Miles Shipside, housing spokesman for Rightmove, says:

“The softness in London and southern parts of the country is no doubt mainly a seasonal effect, with the traditional December slowdown as people are focused more on buying Christmas presents than on buying houses. The lower activity levels and absence of buyers in the market typically push prices down at this time of year and Rightmove is reporting this, rather than hiding it behind seasonal adjustments.”

“As ever, the market is not uniform across the country, and the more northern regions, where supply is short, are still seeing growth.”

Independent housing commentator John Wriglesworth agrees:

“The boom is indisputably over, and now we're moving into the pre-Christmas lull, particularly in London. Lenders' house price indexes are not yet showing this, as their latest figures relate to properties that went on the market in the late summer or early autumn, when the market was much more buoyant.”

“What remains difficult to call is whether house prices will pick up in the New Year – however, I do not expect similar house price rises in 2003 as in 2002. A 4% rise is my forecast for house price inflation nationally, although declines in some areas and types of property, particularly the top end in London, are to be expected.”