Property hotspot prices feel chill

THE housing market is lurching towards stagnation, with average asking prices in some previous 'hotspots' plunging by up to £100,000, according to a study.

In the past month prices have continued to fall in the South of England, or in some cases held steady. The figures from estate agent website rightmove.co.uk suggest the situation is calamitous in some areas.

It claims the average asking price is down by more than 15% on last year in some former boom areas of London, such as Westminster and Camden.

Rightmove says the market turmoil means the annual rate of house price growth has now fallen for eight months in a row to 12.4%. There are 22,000 fewer properties on the market, and the length of time a home takes to sell has risen from 57 days to around 70 since March.

A lack of first-time buyers and five consecutive months of increasing unemployment in the manufacturing sector suggest the market is now in the grip of long-term gloom.

Comparing changes this month with July, Rightmove said asking prices fell, were at a standstill, in virtually every region south of the River Trent.

The biggest mark down was in East Anglia, where the average price of a property fell by 3.6%, taking the figure to £156,599.

The price drop in Greater London is put at an average of 1.4%, but this masks wide variations. For example, the figure is down by 17.2%, or £105,252, to an average £506,000 in Westminster. This figure has, however, been inflated by a drop in price of between £400,000 and £500,000 on a relatively small number of homes which would have sold for up to £3m a year ago.

The average price of a property in Camden is down by almost £71,000 (16.3%) to £363,965. Ten other Greater London hotspots have also registered falls - Tower Hamlets, Richmond, Brent, Hammersmith and Fulham, Lambeth, Hackney, Southwark, Islington, Kingston and Wandsworth.

The prices in the wider South East saw no change in the last four weeks. But the West Midlands recorded a 1.5% fall, while even Wales, which some studies suggested was still seeing increases, had prices marked down 0.9%.

The North posted a 4.5% increase in asking prices in recent weeks, taking the average cost of a home to just over £114,000. This would tie in with reports of a boom in Scotland, which is not covered by the Rightmove study.

Prices in the North West were said to be 2.2% higher, while the figure was up 1.8% in the Yorkshire and Humberside region.

The Rightmove report is based on a survey of 35% of all estate agents. Commercial director Miles Shipside said there was 'a belated summer pick-up in the southern half of the country'. But this had not changed the trend of falling house prices, he added.

The Rightmove report echoes one from the Land Registry, which found the South was dragging the property market towards a slump. It revealed that the annual rate of price rises had fallen from 19.7% to 12.52% in recent months.

The data, covering England and Wales from April to June, found sales were down by 16.27% on the same period last year. In London, the volume of sales had crashed by more than 25% to 28,911.

A separate study from The Woolwich says house price growth is set to slow because first-time buyers have been priced out of the market and high levels of personal debt will make consumers more cautious about taking on big mortgages.

Rising unemployment, higher taxes and low wage rises would also play a part in slowing down the market. The Woolwich expects the annual rate of property price growth to fall to 8% by Christmas.

Head of mortgages, Andy Gray, said: 'The confidence bubble we have seen over recent months may have finally burst.'