-->New sign of downturn as house prices begin to fall

Merope Mills
Monday February 10, 2003
The Guardian

Signs of a property market slowdown appear in figures from the Land Registry released today.
In the first indication that house prices are falling, the survey reports that the value of the average house fell by nearly £1,000 in the final quarter of last year.
The news follows the Bank of England cut in interest rates last week to the lowest level for almost 50 years, highlighting the fragility of the economy.
The slowdown is being felt most acutely in the top end of the market, those properties sold at £1m or more, with Greater London home-owners experiencing the biggest drop.
Houses in boroughs such as Kensington and Chelsea - the most expensive place to buy in the country - have lost up to 25% of their value. Barnet, Haringey, Hounslow and Greenwich are also among the worst hit. But price falls are not exclusive to London. Cheshire, Brighton and Hove, and Monmouthshire are also affected in the slump.
Considered the most authoritative survey on house prices, the Land Registry figures contrast with the 25% rises recently reported by the Halifax and Nationwide building societies' latest monthly surveys.
However, the figures present a mixed picture. Year-on-year house prices nationwide have actually risen by more than 22% in England and Wales.
The average cost of a home is now £145,251, compared to the £146,150 figure for the previous three months.
During the last quarter, 390 properties costing more than £1m were sold in Greater London, the equivalent of more than four a day, down from 628 sales in the third quarter of 2002.
Kensington and Chelsea fell 12% to an average of £581,561 as did the cheapest borough in Wales, Blaenau Gwent, to an average of £47,672.
The downturn is likely to reflect buyer resistance to continued house price inflation, as well as increasing uncertainty about the economy in the face of a war with Iraq. It follows increased warnings that the current rate of price rises were unsustainable.
Most at risk were properties considered to have grown too strongly compared with incomes and desirability.
Year-on-year, the biggest price rises were seen in the east Midlands, where the average cost of a home (£110,853) rose by 28.2%. It was followed closely by the south-west (28%) with the average cost of a home in the region up to £157,043.
At the other end of the scale, Greater London recorded the smallest increase of 18.8% leaving the average home costing £241,838. In the north, house prices rose 20% to an average £82,940.

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