House prices fail to bounce back

House prices fell across the whole of London this month - a time which traditionally sees the market coming back to life after the summer lull.

Hometrack's housing economist John Wriglesworth said: "Our figures suggest that the market peaked in June and is now going in reverse.

"The series of interest rate rises have finally taken hold and have filtered through into the consciousness of house buyers and we see no growth in the near future."

London-wide, prices fell by an average of 0.7 per cent over the last month. They are still generally higher than they were a year ago. But on average they are only three per cent higher than at the same time last year - and that is barely more than the rate of inflation.

Only Hackney has enjoyed a year-onyear price rise that reaches double figures - 10.6 per cent. And in Camden average house prices are 1.9 per cent lower than a year ago.

Over the last month, the biggest losers have been in the west. In Hammersmith & Fulham a price fall of 1.9 per cent equates to a drop of over ?6,000 in a single month. The fall of 1.7 per cent in Ealing means the average house is worth about ?5,000 less than last month. In Kensington & Chelsea a fall of 1.5 per cent means price reductions of more than ?7,500 on the average home.

Hometrack predicts a further one per cent fall across London in coming months, with prices stagnating next year. Experts agree that fears of a housing crash, coupled with more expensive mortgages, have caused the market to stall.

At a time of year when buyers are normally beating a path to the estate agents' doors, there has been a reduction in enquiries of nine per cent.

Sellers are having to accept low offers. According to Hometrack, even those who have already reduced their asking price are having to accept offers on average almost seven per cent below what they hoped for.

Homes are also taking longer to sell - five and a half weeks compared with five weeks last month.

The Hometrack figures were compiled before last week's warning from the International Monetary Fund that the housing market is heading for a crash.

Its predictions will, at the very least, further undermine home buyers' confidence.