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Monthly figures reveal huge fall in property prices
Danny Brierley and Mira Bar-Hillel27 Oct 2008
FRESH evidence of London's collapsing property market emerged today as new figures revealed prices in the capital fell almost nine per cent in the last month.
Homes in Kensington & Chelsea lost an average of £13,000 last month alone, while those in neighbouring Hammersmith & Fulham fell by £7,700, Richmond by £7,500 and in Wandsworth and Merton by £6,000, the Hometrack figures reveal.
The latest monthly fall of 1.6 per cent comes as the Centre for Economics and Business Research said price falls across the country will knock £50,000 off the value of the average home by the end of 2009, pushing values back to their 2004 level. It said prices look set to fall by a quarter from their peak, with the average home set to tumble from a high of just below £200,000 to a low of about £150,000 by the end of next year.
To add to the gloom, data from the National House Building Council reveals that house building in London has hit an all-time low, with only 517 private homes started last month.
The figure is almost half the number begun the year before.
September's fall means London is now the region with the sharpest house prices drop in the country. Hometrack's director of research, Richard Donnell, said: "Weak consumer confidence continues to undermine demand for housing with a 35 per cent fall in the number of buyers registering with agents over the last six months.
"The supply of homes for sale has started to shrink in recent months as well, as some homeowners take their properties off the market. The scale of the decline in demand means prices remain under constant downward pressure."
The number of new private homes being built was also sharply down on August, when construction began on 635.
The NHBC, which registers all new builds, recorded massive falls compared with last year in London and the South East - as well as England as a whole.
Its findings will blow a further hole in the Government's plan to get three million new homes built by 2020.
The falls were almost entirely in the private sector. Housing associations are still benefiting from government money and from planning deals done before the slump and their figures are slightly higher than in the comparable periods last year.
NHBC chief executive Imtiaz Farookhi said: "Our latest figures show that the downturn is continuing to have a severe impact on the output of new homes in the private sector.
"The average fall in England during the third quarter was 50 per cent year-on-year."
The number of new homes completed also fell by around a third between July and September.
Reader views (13)
But but but...prices can only go up surely!? What about all these rich Russians? Those Hong Kong Kings? Wealthy Arabs and other magnates? Aren't they supposed to prop up our market? Ah yes, I see: we only have a problem in the below £15 Million housing market. Everything else above that is doing fine. Pheww we're safe then - told you.
Ah ah ah: would be funny if it wasn't tragic. What a terrible mess this country is in!
- Paul, London, 28/10/2008 08:03
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Charles, you are assuming that everyone is starting from zero - no equity, no property inhereted from parents or grandparents etc. Also, most homes are based on a joint income.
I suppose you could say that the average mortgage should be around 90k per person.
- Lucky Jim, Cambridge, 28/10/2008 00:03
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I work as an energy assessor, most of my work comes from local solicitors. I still have all my clients, still giving me all their work, but referrals from them are down 80% in 6 months, a genuine reflection of houses being put on the market in my area.
I agree with Andy, Lewes, houses need to revert to being affordable, they only became unaffordable once people started seeing housing as an investment (oops) and wanted to borrow as much as possible in order to make the biggest killing!
bring back proper housing values!
- Dan, South West, 27/10/2008 22:54
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Following significant losses, there will be an interlude of sanity in both house prices and borrowing/lending. Don't kid yourself though. Human greed will win the day, and there will certainly be a future where house prices once again go far out of whack. This is a long overdue, but painful correction to the market - and sadly some innocent buyers are caught in the mess.
- Daniel Nessim, London, 27/10/2008 22:21
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I will not be buying until they return to 2000 prices.
Ask yourself. Why do you think they are dropping?
Because the Housing Market cannot survive without FTB's.
If all of us stick together, and nobody buys.
They will come back down to what they were valued for in 2000.
- Daniel, Leeds, 27/10/2008 19:33
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Charles Milne
No you are not. Beware the "talker uppers" with no grasp on reality plus the downright blind. My guess is that the mean of 3X salary may become 2 1/2 before its over. Average house prices have to fall below 100K. Plus-who has 20% deposit? Not many my friend.
- Allan Gregory, Warwick RI USA, 27/10/2008 18:43
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HIPS report anynone, thanks to Crash Gordon?!
- Jacqueline, Hampstead, London, 27/10/2008 18:20
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I feel like a fool for not listening to all those so-called doomsayers and selling while I had the chance.
Everyone in the media brushed aside all those who were going on about impending crash, and so even though I had doubts over how ever-increasing prices could be feasible, I allowed myself to be sucked in.
We're in a huge mess because we allowed idiotic experts to effectively give us investmest advice on prime time telly and allowed the property industry (estate agents, mortgage lenders, construction firms etc) to pull the wool over our eyes and to dictate policy to our government.
- Roy, London, 27/10/2008 18:19
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"September's fall means London is now the region with the sharpest house prices drop in the country"
I thought that London and the South East would be 'immune' from the house price crash? "It's different this time" sayeth the fools.
- Disgruntled Ftb, London, 27/10/2008 17:42
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A mere £50k down by the end of 2009? Try 50% down by end of 2010 for more accuracy.
- Andy, Lewes, 27/10/2008 17:30
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Average incomes in the UK after adjustment to remove extremes are around £18-20k. Will the banks be willing to risk more than 4 times average earnings in the future? This should bring the average house price back to about 90k allowing for a prudent 10% deposit. Or am I wildly adrift somewhere!
- Charles Milne, Battle England, 27/10/2008 16:58
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I hope it plunges some more, back to affordable prices and not the one that requires you to be loaded to afford.
- Delboy, london, 27/10/2008 14:09
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25% you should be so lucky. Why should they not return to their long term relationship to average earnings? Oh I forgot " it's different this time " !
- R James, clifton uk, 27/10/2008 14:08
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