London house prices fall at fastest pace in over 2 years

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by Kay Murchie

According to the Land Registry, property prices in London fell at their fastest pace in over 2 years last month with the cost of the average home in the capital falling by £2,100.

The Land Registry, considered to be the most influential source of house price data, said that the figures are further evidence that the property market has entered a slowdown. The tightening of lending criteria together with overstretched affordability are thought to be responsible for the slowdown.

Official figures show the cost of the average home in England and Wales having reached £184,346 and annual property inflation running at 8.1%.

While price rises in most other regions of England and Wales helped the overall average increase by 0.1%, the significant decline in the capital set alarm bells ringing as the capital’s property market usually sets a course for the rest of the country.

The Land Registry data mirrors figures previously released by other house price reports including the Halifax index and Hometrack index, which also showed prices falling in October.

Howard Archer, chief UK economist at analysts Global Insight, said that evidence is growing that the property market is cooling significantly in the face of tighter lending criteria and increased affordability pressure on house buyers coming from higher interest rates, escalating house prices and muted real disposable income growth.

A recent report from the London Housing Federation established that first-time buyers require an income of over £100,000 to buy an average-price home in a quarter of all London boroughs.

Olivia Powis of the London Housing Federation said property prices in London have reached new levels with thousands of first-time buyers struggling to get their foot on the property ladder.