The London housing bubble may have been pierced after new data showed prices heading downwards for the first time in nearly four years amid signs of "fading" growth in property values across the country.
A net balance of 8 per cent of surveyors in London reported prices falling rather than rising in September, marking the first time the overall price balance has turned negative in the capital since January 2011, the Royal Institution of Chartered Surveyors (Rics) said.
The turning point for the London market brings to an end the longest sustained period of price growth that Rics' regular housing market survey has ever recorded for the capital.
Across the UK, 30 per cent of surveyors reported house prices increasing rather than decreasing in September, down from a balance of 39 per cent the previous month and marking the lowest reading since June 2013.
Looking ahead, surveyors expect prices to rise by 2.1 per cent across the UK for the next 12 months, but in London, where the pace of price growth has been particularly fierce this year, values are forecast to edge up by just 1 per cent over the year to come.
Rics said that the "fading, albeit still robust, price momentum," reflects a continued slide in new house hunters coming to market.
Nationally, demand from new potential buyers has been slipping back for three months in a row, but in London buyers now appear to be acting with particular caution, Rics said.
New potential buyer interest in London has fallen for five months in a row, which is a trend not seen since April 2012.
In Scotland, the effects of the referendum on independence could be seen, with an overall balance of 6 per cent of surveyors there reporting a fall in the number of interested buyers last month, compared with a balance of 49 per cent of surveyors there seeing increased buyer interest in August.
Some estate agents had reported that the Scottish housing market had ground to a halt while potential buyers waited to see what the outcome of the referendum would be.
But Rics said that surveyors in Scotland expect the impact of the referendum will be only temporary, with expectations for both house sales and property prices there remaining "firm".
Simon Rubinsohn, chief economist at Rics, said that while the number of homes for sale generally across the UK is low, the sliding number of potential buyers means that the demand for homes is starting to match the supply of properties for sale more evenly.
"This more even balance is removing some of the upward pressure on house prices, particularly in London.
Rubinsohn said: "This is a healthy development... However, ideally, more supply should be coming onto the market, but with interest rates still at historically low levels and long-term house price expectations positive, households are not under any real economic pressure to sell.
"Next year, we expect the house price outlook to be far more subdued."Reuse content