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Asking prices in London fall by 2.9pc dragging down average UK property prices

Asking prices in the capital have dropped an average £18,000 since last month - © 2017 Bloomberg Finance LP
Asking prices in the capital have dropped an average £18,000 since last month - © 2017 Bloomberg Finance LP

House prices in the UK fell by 1.2pc in September, the third fall in the last four months and the first monthly fall for this time of year since 2013.

The drop was "exacerbated" by London's tumbling asking prices, which have fallen an average of £18,000 since last month, Rightmove said. 

The property portal's monthly index shows asking prices in the capital have dived by 2.9pc since August, thanks to weaknesses at the top end of the market in boroughs such as Kensington and Chelsea (where prices have fallen by 10.2pc year-on-year) and Camden (where prices have fallen an average 6.9pc).

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By comparison, buoyant demand for properties in London’s trendier and more affordable boroughs such as Hackney and Bexley has seen asking prices rise by 9.5pc and 7pc respectively.

Egerton Crescent, Kensington and Chelsea - Credit: Alex Segre / Alamy 
Falling asking prices in Kensington and Chelsea have dragged down average property prices in the UK Credit: Alex Segre / Alamy

It means that a new seller in Camden is marketing their property for almost £74,000 less than they would have done exactly one year ago, while a new seller in Hackney is asking for almost £63,000 more than they would have done in September 2016.

Miles Shipside, of Rightmove, said that falls in asking prices in the south of the country had turned this month into "a bit of a damp squib" for property prices, while some northern regions were still showing marginal signs of upwards price pressure.

"Estate agents are clearly advising many sellers that they have to lower their price expectations to fit in with buyers’ stretched financial resources, with that price compromise hopefully generating extra buyer interest,” he said.

Top 5 | London's best annual performing boroughs
Top 5 | London's best annual performing boroughs

Mr Shipside added that despite property prices still being high, having gone up every year for the last six years, buyers were now benefiting from wage increases, which are currently running at nearly double the annual rate of property price rises.

While affordability constraints are a major factor in the slowing pace of price rises, demand for the right housing at the right price remains strong due to a chronic under-supply.

In spite of these factors, however, the number of sales being agreed by estate agents is 4.8pc higher than the same period a year ago, with all regions being up, including London - despite its large monthly price fall. 

Top 5 | London's worst annual performing boroughs
Top 5 | London's worst annual performing boroughs