A new survey of the UK property market provides evidence that the slowdown is extending to London and the south-east.
Property analysts Hometrack have published their data for July which reveals that overall house prices have fallen by 0.1 per cent, the first fall for seven months.
They say that the traditional summer slowdown has started earlier and report an increased number of properties for sale against a reduced level of demand.
Hometrack said the reason for the overall decline was that the number of potential buyers has fallen whilst the number of homes being put on the market is increasing. New potential buyers registering with estate agents fell by 2.1 per cent month-on-month, whilst the volume of homes being added to the market rose by 1.4 per cent.
The analysts expect this trend to accelerate during the next three months as the summer slowdown has begun earlier than normal. This is likely to make house prices fall further.
The data for London and the south-east showed the biggest change. Both regions have been supporting the overall property market but July saw a distinct slowing in activity in both regions.
The percentage of the asking price received remained the same in July at 93.1 per cent and the time that the average house took to be sold increased to 9.5 weeks. However, there were big regional variations with the average home in London selling in just 5.3 weeks compared to the north-east where the average seller had to wait 12 weeks.
Richard Donnell Director of Research at Hometrack said: “The survey shows that the housing markets of London and the South East - areas that have supported headline price growth since the beginning of the year - are starting to slow as demand weakens and supply rises.”
House prices still increased in London, by 0.1 per cent, but at a slower rate reflecting the fall in demand and increased number of properties on the market. London saw an above average fall, 2.4 per cent in new buy registrations while the south-east saw the biggest fall in demand of any region at 3.4 per cent.
Prices in the south-east fell in 35 per cent of postcodes in the region.
Hometrack said that the first four months of the year saw a big increase in buyers registering with agents that helped keep prices up but as the seasonal slump begins and the economy remains weak, demand has fallen.
The north-east saw the biggest fall in prices with a 0.5 per cent drop. Prices in the north-west fell by 0.3 per cent and those in Wales, the west midlands, the south-west and Yorkshire and Humberside fell by 0.2 per cent. The south-east and east Midlands saw a 0.1 per cent drop and prices were flat in east Anglia.
The report suggests that the falls in house prices seen in Northern Ireland and regions in northern England are starting to bottom out.
Mr Donnell added: “There is evidence that price falls may start to slow as the proportion of the asking price being achieved in Northern regions has improved over recent months, albeit off a low base.”
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