London house price fall of 6.8% in past month stokes economy fears
Gabriel Rozenberg, Economics Reporter
House prices in London have fallen by an average of £28,000 in the past month, as the capital sets the pace of an accelerating property downturn, a leading survey reports today.
Rightmove, the property website that tracks asking prices for homes across the market, says that prices tumbled by £20,000 a week in affluent Kensington and Chelsea – and by more than £10,000 a week in inner-city Hackney.
The company’s data shows that house prices fell by 3.2 per cent across the country, and by 6.8 per cent in London, over the month to the middle of December.
The figures are the gloomiest that homeowners have had to face since the market began to turn this autumn.
In Kensington and Chelsea, the average asking price in December was £1,572,814, compared with £1,653,696 a month ago. In Hackney, prices fell from £473,377 to £425,007.
However, house prices in the West London borough had risen by 41 per cent in the past year.
The news comes as business leaders warn that a property-led downturn in investment is set to hamper the economy next year.
The CBI says today that consumer spending will slow sharply and overall growth will be weak for the next two years.
This may worsen if the credit crisis deepens.
Rightmove says that the substantial falls in asking prices confirmed that sellers were adjusting to a new reality of buyers’ unwillingness to take any chances in a deteriorating market.
However, the impact of the downturn has been magnified by sellers putting their homes on the market before compulsory and costly Home Information Packs (HIPs) were introduced for smaller properties last week.
Prices fell in most regions of England and Wales, but the effect was harshest in London and the South East.
The falls took the national house price inflation rate down to 4.8 per cent, from 7.9 per cent the previous month, with a house typically losing £7,590 in value.
Miles Shipside, commercial director of Rightmove, said that the introduction of HIPs had distorted the latest figures.
He said: “Many sellers who have listed this month have priced below the market to try to sell. It is wrong, however, to speculate that prices will continue to fall based on one month’s statistics from a quiet December.”
However, the report said that the property market was now in “uncharted territory” because of the difficulty that mortgage lenders are having in raising funds.
Fears over a shortage of liquidity have caused money markets to seize up in recent weeks, in a renewal of problems first seen over the summer that have darkened the outlook for the economy.
Concern over the credit squeeze has led the CBI, the business group, to cut its forecast for growth next year for the third time.
It now predicts that the economy will expand by 2 per cent in 2008 and by 2.1 per cent in 2009. The decline from bullish growth of 3.1 per cent this year will be driven by a fall in investment in residential and commercial buildings, the CBI said, and by the effect of the squeeze on the financial sector.
Consumer spending growth was tipped to weaken to only 1.9 per cent next year, from a figure of 3.1 per cent this year.
Ian McCafferty, the CBI’s chief economist, said, however, that most CBI members had not experienced any tightening of credit conditions. (AtW's comment: they should experience tightening of short term thinking first) That suggested that the economy would experience a soft landing, with problems largely confined to financial services.
However, Mr McCafferty added: “It is a brave man who predicts how long the paralysis in the markets might last, and the longer it continues, the more pervasive the impact might be.”
Gabriel Rozenberg, Economics Reporter
House prices in London have fallen by an average of £28,000 in the past month, as the capital sets the pace of an accelerating property downturn, a leading survey reports today.
Rightmove, the property website that tracks asking prices for homes across the market, says that prices tumbled by £20,000 a week in affluent Kensington and Chelsea – and by more than £10,000 a week in inner-city Hackney.
The company’s data shows that house prices fell by 3.2 per cent across the country, and by 6.8 per cent in London, over the month to the middle of December.
The figures are the gloomiest that homeowners have had to face since the market began to turn this autumn.
In Kensington and Chelsea, the average asking price in December was £1,572,814, compared with £1,653,696 a month ago. In Hackney, prices fell from £473,377 to £425,007.
However, house prices in the West London borough had risen by 41 per cent in the past year.
The news comes as business leaders warn that a property-led downturn in investment is set to hamper the economy next year.
The CBI says today that consumer spending will slow sharply and overall growth will be weak for the next two years.
This may worsen if the credit crisis deepens.
Rightmove says that the substantial falls in asking prices confirmed that sellers were adjusting to a new reality of buyers’ unwillingness to take any chances in a deteriorating market.
However, the impact of the downturn has been magnified by sellers putting their homes on the market before compulsory and costly Home Information Packs (HIPs) were introduced for smaller properties last week.
Prices fell in most regions of England and Wales, but the effect was harshest in London and the South East.
The falls took the national house price inflation rate down to 4.8 per cent, from 7.9 per cent the previous month, with a house typically losing £7,590 in value.
Miles Shipside, commercial director of Rightmove, said that the introduction of HIPs had distorted the latest figures.
He said: “Many sellers who have listed this month have priced below the market to try to sell. It is wrong, however, to speculate that prices will continue to fall based on one month’s statistics from a quiet December.”
However, the report said that the property market was now in “uncharted territory” because of the difficulty that mortgage lenders are having in raising funds.
Fears over a shortage of liquidity have caused money markets to seize up in recent weeks, in a renewal of problems first seen over the summer that have darkened the outlook for the economy.
Concern over the credit squeeze has led the CBI, the business group, to cut its forecast for growth next year for the third time.
It now predicts that the economy will expand by 2 per cent in 2008 and by 2.1 per cent in 2009. The decline from bullish growth of 3.1 per cent this year will be driven by a fall in investment in residential and commercial buildings, the CBI said, and by the effect of the squeeze on the financial sector.
Consumer spending growth was tipped to weaken to only 1.9 per cent next year, from a figure of 3.1 per cent this year.
Ian McCafferty, the CBI’s chief economist, said, however, that most CBI members had not experienced any tightening of credit conditions. (AtW's comment: they should experience tightening of short term thinking first) That suggested that the economy would experience a soft landing, with problems largely confined to financial services.
However, Mr McCafferty added: “It is a brave man who predicts how long the paralysis in the markets might last, and the longer it continues, the more pervasive the impact might be.”
I finally managed to sell a house I've been trying to offload on Friday 
moment when I finally got my money. The uber doom headlines this morning were certainly more enjoyable than last week.
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