London homeowners see prices fall by £900 a week

London homeowners saw almost £900 a week fall off the value of their properties last year.

Prices of flats and houses slumped a further 2.3 per cent last month, the ninth consecutive monthly fall, according to official Land Registry figures

It brought an end to the worst year for the London homes market since the early Nineties, with a total fall for last year of 12.9 per cent.

By December the average price of a home in the capital was down to £307,071 - £45,585 less than a year ago.

With median full-time earnings in London standing at about £33,000 many homeowners will have lost more on their home than they earned from their job.

The biggest monthly price falls last month were in Islington (4.1 per cent), Tower Hamlets and Haringey (both 3.3 per cent).

The boroughs with the biggest annual slides in value last year were Richmond (14 per cent), Islington and Waltham Forest (both 13.8 per cent).

London prices are now at levels not seen since November 2006 and are still in free fall, according to agents. The real picture is probably even worse because the Land Registry figures tend to lag behind the actual state of the market by three or four months.

But agents say have seen a dramatic upsurge in interest and registrations from potential buyers since Christmas - but they have yet to convert this into actual deals. The figures show how the London property market came to an almost total standstill during the drama of the banking crisis in the autumn.

In October the number of completed deals was down two-thirds to just 4,604, the lowest monthly figure on record, compared with 13,354 a year ago.

The collapse in deals was most marked in the "bread and butter" property bands of £250,000 to £300,000 (down 72 per cent) and £300,000 to £400,000 (down 70 per cent).

There were 46 homes sold for less than £100,000, outstripping the 41 bought for £2million or more. In October last year there were 81 in the £2million plus bracket and 58 sold for five figures.

The figures came as another survey showed that house prices continued to tumble this month.

Britain's biggest building society, the Nationwide, reported that the price of a typical home is now 16.6per cent lower than a year ago at £150,501. That annual pace of decline is an acceleration of the slump from December, when prices were down 15.9per cent on the year.

Nationwide senior economist Martin Gahbauer said there was little prospect of noticeable improvement in the economy in the short term, but said the weak pound and initiatives by the Bank of England "provide the path for a further recovery out of recession".

Research from agents Savills suggests that the biggest concerns holding buyers back remain the risk of further falls in prices, worries about job security and lack of finance from lenders.