Rightmove's November edition of the Real-time Property Report reveals a fall in house prices of 0.2%.
This is in sharp contrast to the strong monthly rise of 2.7% recorded for October, and follows the exceptional 22.2% rise in prices over the last year.
The price fall is largely attributed to price falls in London, especially at the most expensive £750,000-plus end. Large numbers of job losses in the City are beginning to take their toll, and the softening of the London market can be expected to continue over the next few months.
The three months to November have seen asking prices decrease in around a third of London boroughs including Westminster (-11%), Camden (-7.6%), Tower Hamlets (-5.4%), and Kensington & Chelsea (-1.9%).
Elsewhere in the UK house prices are mostly holding up well, with large quarterly increases of 9% in the north, 6% in the north west, and 5.5% in Wales, contrasting with 2.5% in the south east (outside London), 0% in East Anglia, and a fall of 0.2% in London.
House prices have now soared to record levels as a multiple of average earnings. The November 2002 average full-time earnings are £25,070, and house prices at £155,199 are therefore 6.19 times average earnings. This is an unprecedented figure, only made possible by continuing low interest rates. If interest rates rise in the New Year, the affordability of property will quickly become unsustainable.
Rightmove.co.uk's November Real-time Property Report, based on up-to-date asking price data for houses just on the market, includes properties that will be sold up to the year-end and can therefore provide an accurate measure of the housing market ahead of other house price indicators.
Rightmove housing commentator Miles Shipside says: “Houses are now becoming unaffordable and especially so in central London. If present trends continue, house prices in central boroughs will be down 10% by the end of next year and down by around 5% in Greater London.
“However, the rest of the country is proving to be robust, and we see prices continuing to rise next year, unless interest rates rise significantly.”
Independent housing market expert John Wriglesworth comments: “Houses and flats in central London which have seen the highest rises over the last few years are now seeing reductions reflecting a decline in demand, not least due to City job losses. While I expect these price reductions to cascade to outer boroughs, historically low mortgage interest rates are helping to support house price rises elsewhere in the country where employment levels are still very high.”