House prices in most London areas now falling for first time in nearly four years as property market starts to run out of steam
By Lee Boyce for Thisismoney.co.uk
A majority of areas in London are seeing property price falls for the first time in nearly four years after a dramatic slide in the number of new house hunters in the capital, surveyors have reported.
A net balance of eight per cent of surveyors in the capital reported values falling rather than rising in September. This is the first time the balance has been negative in London since the start of 2011, the Royal Institution of Chartered Surveyors said.
This turning point spells the end of the longest sustained period of price growth in the capital ever recorded by the Rics housing market survey.
London crash: The graph above shows how new buyer enquiries in the capital have fallen drastically
Whilst the picture for prices turned negative in London, elsewhere in the country most areas continued to report rising prices.
However, the headline price balance has shifted and across Britain a balance of 30 per cent of surveyors said house prices increased rather than decreased last month – down from 39 per cent in August.
This is the lowest reading since June 2013.
Nationally, demand from potential buyers has been slipping back for three months in a row, but in London where prices had hit eye-watering levels in popular commuter areas, buyers appear to be acting with even more caution, Rics said.
New potential buyer interest in London has fallen for five months in a row, which is a trend not seen since April 2012.
Estate agents in Scotland reported that the housing market had ground to a halt while potential buyers waited to see what the outcome of the referendum would be.
The effects of the referendum on independence meant an overall balance of six per cent of Scottish surveyors reported a fall in the number of interested buyers last month, compared with a balance of 49 per cent of surveyors seeing increased buyer interest in August.
On the turn: There were still more agents reporting price rises across the country, but the balance is shifting.
Property peak? Fewer surveyors say house prices are rising than falling in recent months, Rics data shows.
Surveyors expect prices to rise by just 2.1 per cent across the UK for the next 12 months, but in London, where the pace of price growth has been particularly fierce this year, values are forecast to edge up by just one per cent.
Rics said the 'fading, albeit still robust, price momentum,' reflects a continued slide in new house hunters coming to market.
Simon Rubinsohn, chief economist at Rics, said while the number of homes for sale generally across Britain is low, the sliding number of potential buyers means that the demand for homes is starting to match the supply of properties for sale more evenly.
This more even balance is removing some of the upward pressure on house prices, particularly in London
Mr Rubinsohn said: 'This is a healthy development. However, ideally, more supply should be coming onto the market, but with interest rates still at historically low levels and long-term house price expectations positive, households are not under any real economic pressure to sell.
'Next year, we expect the house price outlook to be far more subdued.'
Halifax yesterday said average property prices rose £1,100 in September. However, more homes for sale, a tighter mortgage market and the London property market easing, are set to trigger a slowdown according to the lender.
Property listing website Zoopla also reported home buyer confidence fell to its lowest level in 15 months, although 88 per cent of owners still expect prices to rise in their area over the next six months.
And according to the Centre for Economics and Business Research, house prices will dip by 0.8 per cent next year while it predicts 2015 will be a 'turning point' for runaway property prices.