Average house prices in London reached a peak of £399,000 in August but have since started to come down in line with the rest of the UK, to reach £388,000 in October.
Independent buying agent Gabby Adler says the downturn is due to a combination of more realistic pricing options and the increase in stamp duty tax introduced in March.
Independent buying agent Gabby Adler says: “London’s strong performance continues to drive the housing market, a trend which is expected to carry on into next year, while in other parts of the country there have been considerable falls in values. Yet even in London we are seeing price reductions as vendors become more realistic on pricing and realise what they have to do to achieve a sale in a difficult market. No price bracket seems immune, with prices cut on high-value, multi-million pound properties, down to entry level homes.
“Properties of up to £1.2m are selling fast but properties above that level are taking much longer to sell, particularly in the £2m band which have been hard hit by the increase in stamp duty in the Budget.”
Chancellor George Osborne announced a 2 per cent increase in stamp duty tax, from 5 per cent to 7 per cent, for homes valued at over £2m in March.
The average UK house price peaked at £234,000 in August but has since fallen to £231,000 in October.
House prices in Northern Ireland fell to their lowest average in seven years. Average house prices fell to £124,000 in October, down from £130,000 in September. House prices were last at this level in March 2005.
First time buyers paid an average of £172,000 in October, down from a peak of £174,000 in August.
SPF Private Clients chief executive Mark Harris says: “The mortgage market is still constrained but is showing signs of easing, which will have a positive effect on the housing market. The Funding for Lending scheme continues to progress but it is a slow burner and no overnight solution for the woes of the market.
“More lenders are likely to start reducing their rates in the New Year as these funds filter through. However, it will be a while before first-time buyers benefit as lenders are likely to continue to saturate the 60 per cent LTV market with rock-bottom deals a while longer, before turning their attention to higher LTVs. The problem first-time buyers will have is that while rates may come down, criteria are likely to remain tight so meeting these could be the issue.”