Thrifty Loans

London house prices have fallen backwards for the first time this year. Often seen as the engine of the property market across the country, asking prices in the capital have fallen for the first time in 2007.

In London the average asking price was £394,268 in July, up by 23.4% in a year, but down by £462 on June.

Any price drop in London is seen as significant as falls seen elsewhere in the country have not affected prices in the capital. London’s prices have been forced upwards by a combination of a steady flow of immigrant workers, rich foreign buyers, high City bonuses and a shortage of property.

Beleaguered homeowners have had to put up with five interest rate rises in the last 12 months which have taken the rate from 4.5% last August to its current level of 5.75%.

Miles Shipside, commercial director at property experts Rightmove said:“This fall is the first we have seen for some time and is an early warning signal that even the buoyant London economy is susceptible to market forces. The fall was only slight, at just 0.1%, but has to be seen against the fact that London prices have risen by an average of 2% a month for the last 12 months.” Rightmove believes the situation in the capital will be reflected across the rest of the country.

Other regions taking steps backwards are the West Midlands, North of England, and the South West. Rightmove also saw falls in West Midlands (2.2%) and North of England (0.6%), while the South West was unchanged.

There has also been a decrease in the number of properties coming onto the market. Rightmove counted only 148,000 properties put up for sale during the July in England and Wales. This was the smallest figure since the beginning of the year.