Owners slash prices of London homes

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A house price index report from property agent Rightmove shows that sellers in London have "recognised the need to price aggressively" in order to make London homes more affordable for potential buyers.

The change, Rightmove suggests, is so that sellers can avoid 'Brickor Mortis' - a recent term added to the property lexicon to describe houses that will not shift from the housing market.

As a result, London house prices have dropped 5.3% in the last month, according to figures, and like many other parts of the country the capital has found itself in negative territory for asking prices year on year.

Miles Shipside, commercial director of Rightmove, said: "Londoners have so far been largely insulated from the price falls taking place elsewhere in the country.

"However, sellers who choose to come to the market during the peak holiday season generally have a greater need to sell, and as a result properties coming onto the market in July were on average £21,000 cheaper than last month." He added that all but six of the 32 London boroughs had cheaper asking prices than last year.

However, there may be good news for homeowners who are in the vicinity of new transport links, such as the Olympic-linked East London line extension that is due to open in 2010.

Mr Shipside said: "Areas that are about to benefit from improved transport links appear to be avoiding the worst of the storm that is setting in elsewhere in the capital." He added that people looking for potential profit areas should "take up transport detective work as a hobby".

A Communities and Local Government spokesman said that the recent downturn in London asking prices was about the availability of credit. He said: "When looking at trends in the market, it is important to remember that UK house prices are significantly higher than five years ago.

"The current issue affecting the market is largely about the supply of credit - a very different situation to the early 90s which was about high interest rates and unemployment. The fundamentals underpinning the market remain sound with long-term demand for housing, low interest rates, and low unemployment."