The sales website Home claims that London house prices have dropped an average of 1.2 per cent in the past four weeks, the third successive monthly drop – and it says this is now prompting panic selling.
Home claims the annual rate of price inflation for Greater London property now stands at just 2.5 per cent and predicts it will reach zero well before the end of the year “highlighting the very real danger that negative equity is just around the corner.”
Although the post-referendum drop in the value of Sterling is seen as an incentive for overseas buyers now, Home says that foreign buyers who had already purchased a property in London within the last 12 months are probably in negative equity.
“In terms of Euros, Greater London home prices have shown a dismal performance over the last year, with values in the region dropping 11 per cent since May and 17 per cent since November last year” according to the site’s latest index.
The website claims “further price falls are inevitable in the capital” with more sellers overloading the market.
It claims that in the year to July 2016, new listings in London leapt by 27 per cent.
Home’s measure of the typical time on the market for homes on sale has also risen sharply in the capital, from 68 days in July to 73 days now.
It warns that south east England – where in asking prices have dropped by 0.2 per cent for the second month in a row – “is showing signs of becoming the next property price slump hot spot, as panic selling in the capital spreads out into the capital’s commuter belt and beyond.”
In the 12 months to July 2016 the supply of property for sale in south east England rose 19 per cent.
“It’s clear that the referendum result certainly unnerved many investors. We will be keeping a particularly close eye on the London market over the next month, watching whether or not the surge in new listings becomes a stampede. This would inevitably lead to a home price crash in the region and stress mortgage lenders to the limit or beyond” says Home’s director, Doug Shephard.
“Property investors would be well advised to weather the storm and not join a suicidal rush to market” he adds.