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London house prices drop £13,000 in a month as jittery buyers step back from the market

Average asking prices in London have fallen by almost two per cent — or £13,000 — in the past month as jittery buyers step back from the market amidst the cost of living crisis and owners increasingly resort to price-cutting.

At £682,000, prices in the capital are up 5.3 per cent year-on-year according to Rightmove’s monthly house price index.

That is around half the current rate of inflation, meaning prices have fallen in real terms.

Asking prices slipped in every region in the UK last month, by an average of 1.1 per cent, and the number of discounted properties is double the number which were reduced in October 2021 as rising interest rates makes the market increasingly price sensitive.

“The exceptional price growth of the last two years is unsustainable against the economic headwinds and growing affordability constraints,” said Tim Bannister at Rightmove. “We’re hearing from agents that both existing and new sellers understand that to sell in the current market they need to price competitively.”

Beyond the headline figures around two thirds of London boroughs have outperformed the gloomy picture and saw prices growth inch up last month.

The best performer was Richmond, with average asking prices up three per cent to hit £936,000. Over the last year Camden’s prices have increased by 12.8 per cent year on year to an average £1.07m.

At the other end of the spectrum prices in Islington dipped 2.5 per cent last month to £797,000. Prices in Lambeth have flatlined completely since October 2021, at £675,000, and prices in Wandsworth, and Westminster are up just one per cent.

In north London Jeremy Leaf, principal of Jeremy Leaf & Co estate agents, said buyer confidence had been knocked during the brief and ill-fated Liz Truss premiership.

“There are likely to be fewer transactions next year as enquiries have reduced substantially since the mini-Budget and are only slowly starting to improve,” he said.

Mal McCallion, chief operating officer of GetAgent.co.uk, agreed that “the landscape has certainly become trickier over the past few weeks”.

The latest report from the Royal Institution of Chartered Surveyors, which measures housing market sentiment, backs today’s research, reporting a drop off in both demand and house price growth.

“The market slows naturally as Christmas approaches, but the change has been greater than usual,” said Allan Fuller, of Allan Fuller estate agents in Putney.

“The mini-Budget created uncertainty, the escalation in interest rates coupled with the disastrous political situation has made buyers cautious. Hopefully, the new prime minister will create the stability the housing needs.”

UK house prices fall

The average price tag on a UK home has dropped by more than £4,000 over the last month, said Rightmove.

Across Britain, the average price of a newly marketed home in November is £366,999.

The £4,159 drop in the average asking price compared with October equates to a 1.1 per cent month-on-month fall.

This is in line with the typical 1.1 per cent drop recorded in the month of November during the pre-pandemic years of 2015 to 2019, Rightmove said, with sellers often pricing properties more competitively at this time of year.

The website said that the first-time buyer sector continues to be the most affected by falling demand for marketed properties compared with last year.

There are also signs that more sellers, whose properties are sitting on the market and unsold, are willing to reduce prices in order to sell.

The proportion of unsold properties which have had a price reduction increased slightly from the pre-pandemic 7.5 per cent in October 2019 to eight per cent in October this year.

However, it has doubled from the figure of four per cent in the more active housing market of October 2021.