House prices below £300,000 after nine months of decline

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After nine consecutive months of price falls, property in the capital is now worth 6.2 per cent less than it was in August last year - the equivalent of a drop of almost £17,000.

Last month alone, prices fell by an average 1.1 per cent or £3,300.

The biggest losers were home owners in Wandsworth, who saw the value of their homes fall in value by £6,800. In Merton the reduction was £5,200 and in Tower Hamlets the average price was down by £5,100.

The Hometrack report shows:

Selling prices fell in every London borough.

Kingston, Lewisham and Havering recorded the lowest falls. The average property in all three boroughs lost only £1,200 of its value last month.

There are four London boroughs with average prices below £200,000: Barking and Dagenham, Bexley, Lewisham and Newham.

Year on year, the worst price falls have been in Lewisham - down by 11.8 per cent, followed by Enfield, down 7.8 per cent. Prices in Hackney and Tower Hamlets fell 7.5 per cent.

Richard Donnell, Hometrack's director of research, said: "When the market turns it can take as long as 24 to 36 months for prices to reach realistic levels and we are now well into this process.

"With ever-growing uncertainty among households over the broader economic outlook the current re-pricing of housing still has some way to run.

"At present, sale prices are running at around 10 per cent below askingprices, which suggest that people are still being too optimistic about the value of their homes. In the spring of 2007 this gap was below five per cent."

He added that the number of sales had taken the biggest hit, with some areas down by 50 per cent.

The survey shows that the average time a property spends on the market has risen to 11.3 weeks, while viewings fell for the first time in almost a year.

This creates a situation known as "brickor mortis", when properties die a death in estate agents' windows.

Seema Shah, property analyst with Capital Economics, said: "Buyer confidence, already reeling from the fallout of the mortgage credit squeeze, is likely to be further depressed as the economy heads for recession.

"Our forecast is for prices to fall by 15 per cent this year and continue falling in 2009 and through 2010."