House prices drop 2% in a year

London and Scotland were the only two regions in the UK to experience any growth, with 0.3 per cent rises on last year’s prices.

But fortunes vary widely even within the capital itself, with 22 of its 32 boroughs reporting falls in the last month.

The report – compiled by the Centre For Economics And Business Research – also noted a 1.8 per cent fall in flat prices to £168,231.

CEBR chief executive Douglas McWilliams said: “In recent months, the housing market slowdown has gathered momentum – transactions have all but ground to a halt with mortgage approvals at a record low in June and transactions in 2008 to date 41 per cent down from 2007.
“Prices look set to fall further, but in a gradual fashion as demand is hit by the dual shocks of the credit crunch and rising inflation.�

While London prices have taken a softer hit than the rest of the country, some boroughs are enjoying better luck than others.

Houses in Camden have surged by 11.3 per cent since last year while Kensington and Chelsea rose by 10.6 per cent. But Hammersmith and Fulham dropped by two per cent at the same time.

The number of transactions in Tower Hamets is 45 per cent lower over the first five months of the year compared to 2007. Price inflation year on year fell to 2.4 per cent, compared to 6.6 per cent in June.

In the neighbouring borough of Newham, the flow of transactions stands at 21 per cent lower compared to the five months of last year.

Chesterton CEO Robert Bartlett said: “Until we see an increase in credit availability there will continue to be downward pressure on prices.
“But I do expect that we will see an improving volume of transactions as unrealistic vendors become faced with the realities of corrective pricing.
“Certainly there are buyers in the market, but only at a price.�