New house prices fall

Homeowners are slashing thousands off their asking prices as the downturn in London's property market picks up speed.

As house prices continue to drift downwards, a nine per cent gap has opened between the average advertised price and selling price in the capital - the largest on record.

Traditionally the selling price of houses averaged between 96 and 98 per cent of the advertised price in England. The new London figure is 91 per cent, according to property price monitor Hometrack

While homeowners are asking on average well above the £250,000 mark, they are actually selling their homes for an average price of only £230,500.

Jeremy Leaf, London spokesman for the Royal Institution of Chartered Surveyors, said: "Sellers are obviously still asking unrealistically high prices, based on historic expectations.

"But those who are prepared to be more flexible are recognising that the really relevant consideration is the difference between what they are selling for and what they will be paying for their next home. This creates a kind of chain of relatively low offers which has affected the statistics."

House prices in London fell 0.1 per cent this month, for the sixth month in a row, and are 0.5 per cent down since October.

The falls are now rippling out into the Home Counties and beyond. House price nationwide have also dipped slightly for the first time this month.

Average prices fell by 0.1 per cent in April, both in London and the rest of the country. The biggest falls were 0.8 per cent in London's cheapest borough, Barking and Dagenham, and 0.7 per cent in the most expensive, Kensington and Chelsea.

Prices have fallen even more sharply in the Home Counties, most notably in Surrey (0.9 per cent), Berkshire-0.8 per cent), East Sussex-0.6 per cent), and West Sussex (0.5 per cent).

The biggest increase, 0.2 per cent, was in Tower Hamlets. Twenty boroughs reported house price falls, in nine there was no change, and four boroughs reported rises.

Hometrack conclude that "increasing supply and falling numbers of buyers leaves a depressed market heading for further price falls in the coming months".

Demand for property in London has been falling since June last year. This month the number of new propertiesfor sale rose by nine per cent, while the number of new buyers fell one per cent. In spite of this, the number of viewings of each property for sale is over 17, suggesting a lot of "window shopping". It is also taking longer, six weeks, to find a buyer.

Hometrack's economist John Wriglesworth said: "The London housing market is showing signs of embedded weakness. However, with the stock markets continuing an upward trend we should slowly see signs of a more healthy market returning."