House prices down two per cent in a year

House prices have fallen in almost every borough in London over the past 12 months as the property market continues to falter.

Figures published today show the average house in the capital is worth almost two per cent - about £5,500 - less than a year ago.

The figures, from Hometrack, also show prices fell by almost half a per cent between April and May alone - an average of £1,200 - as the credit crunch continued to bite.

An average house now costs just under £308,000 and many sellers are having to settle for offers below the asking price to tempt buyers.

The only local authorities not to have seen prices fall are Barnet, Richmond, Newham, Camden and the City of London.

The biggest percentage falls were in Sutton and Lewisham, where prices are now almost four per cent below last May's levels. Other losers include Lambeth, Ealing, Hackney and Croydon, with falls of more than three per cent.

Richard Donnell, Hometrack's director of research, said the problem was supply outstripping demand for homes. He said: "What we call the 'buyer's strike' continues, with a fall of 11.7 per cent in the number of buyers registering with London agents in May. At the same time, the number of homes on the market, which is already greatly oversupplied, grew by a further 5.3 per cent."

Traditionally, May is one of the busiest months of the year. Hometrack found that while the number of viewings per sale was still high - more than 16 - sales themselves were down more than three per cent over the month. Contracts were being exchanged, on average, at eight per cent less than the asking price.

"The survey indicates that pricing looks set to remain under downward pressure over the coming months," Mr Donnell said.

Chris Brown, president of the National Association of Estate Agents, said: " Buyers are adopting a 'wait and see' attitude."