London property prices have slumped for the first time a year, with central London prices falling 1.2 per cent in November.
The figures, published today, reveal a narrowing in the north-south divide for the first time this year. But there’s slightly positive news in the monthly national housing survey from Hometrack in that year-on-year price deflation of -0.3 per cent is the lowest rate of fall since October 2010.
The average monthly price change across the country was 0.1 per cent last month, the same as the previous two months.
But the property analytics firm warned that there will be a continued slowdown of the housing market as the seasonal slowdown hits.
Richard O’Donnell, director of research at Hometrack, said there is evidence that the performance of housing markets in the north and south of the country is starting to converge.
“The gap between asking and achieved prices is closing in northern regions and this is reducing the downward pressure of pricing,” he said. “The slowdown in demand seen in the last five months has also been less pronounced in northern regions.”
Demand has fallen 4 per cent in the north compared to a 12 per cent slump in the south.
Meanwhile new research from Legal & General suggests that the market has hit bottom but won’t return to normal for five years.
Even then it will be a very different housing market, according to the report put together by the Centre for Economics and Business Research.
The study, “A New Normal in the Housing Market”, suggests that gross mortgage lending will rise to £212bn by 2017. That’s up from £142bn this year but below the £363bn seen in 2007.
It suggests there are eight key factors which will prevent the UK housing market from reverting to a 'normal' state. The weak economy, declining growth in house prices and restrictive borrowing are the three most important factors affecting households' decisions to buy.
But the weak labour market, lack of government support, Eurozone uncertainty and lack of housing being built are other factors holding back buyers.
Ben Thompson, managing director of the Legal & General Mortgage Club, said: “The past five years have been extraordinarily tough for the housing market, but good news is on the way. The hope is that following the trauma of the property crash what we will have by 2017 is not only a healthier market place but ultimately a more balanced and sustainable one.”
But things are not looking so good for renters. RightMove reckons rents will rise 2 per cent in 2013. More than a fifth of current tenants already pays 50 per cent or more of their take-home pay on rent increasing worries that renters are reaching an “affordability ceiling”.
Average rents have increased by 13.6 per cent since 2009 as demand continues to outstrip supply, RightMove reports.