House prices continue to fall, except in London

House prices have fallen for the 15th month in a row and are set to accelerate further downwards in the next few months. The warning comes from the latest national Housing Survey published today by property analysts Hometrack which reveals that the number of new buyers fell for the second month in a row.

Meanwhile, as the number of new properties coming to the market in the nine months to September grew by 22 per cent, demand increased by just 11 per cent, showing a widening gap in the balance between supply and demand.

Richard Donnell, director of research at Hometrack, said: "Events in the Eurozone, together with pressures on the domestic economy and household incomes, are clearly taking their toll on consumer confidence." He predicted demand will continue to slip back over the final few months of 2011. "This will compound the gap between supply and demand and suggests a likely acceleration in the level of monthly price falls over the final quarter of the year."

The north-south property divide is also growing. While price falls averaged -0.5 per cent in the second half of 2010 and -0.1 per cent in the last six months, prices in London have continued to climb, averaging a monthly increase of 0.2 per cent since July 2010. Significantly, while houses are averaging 11 weeks on the market before going under offer in the north, midlands and Wales, in London it takes just over six weeks. Similarly, while prices achieved in the capital are just 6 per cent below asking prices, in the north the figure is 9 per cent.

"The wider the gap between asking and achieved, the less slack there is to absorb weaker demand," said Mr Donnell. "In the short-term we see above average price falls registering in the housing markets in the north of the country."