Summer lull sees home prices fall in parts of London

Home sellers in affluent areas of the capital cut back on expectations during the holiday season

PUBLISHED : Wednesday, 21 August, 2013, 12:00am
UPDATED : Wednesday, 21 August, 2013, 3:10am

Home sellers in London reduced their asking prices this month, with affluent districts such as Kensington and Chelsea leading the decline during the seasonal summer lull, according to Rightmove, a property-website operator.

Prices sought in the capital fell 2.8 per cent from July to an average £501,067 (HK$6 million), the company said in a report. In the boroughs of Kensington, Camden and Westminster - where average values exceed £1 million - there was a drop of £90,000.

"A holiday-season price dip is the norm in August," said Miles Shipside, director at Rightmove. It's "down-time rather than a downturn. The top-end market remains buoyant, but they're currently busy bobbing about on their yachts."

Nationally, values dropped 1.8 per cent in August, the first decline this year. Prices are still up 5.5 per cent in the past year as measures by the government and the Bank of England to improve credit availability boost demand. Rightmove said more must be done to increase supplies to prevent a property bubble.

The British Treasury's Help-to-Buy programme is already providing loans to consumers for deposits for new-build homes, and a second stage in 2014 will see the government provide guarantees on mortgages for existing homes.

"The underlying recovery in the housing market continues," Shipside said. "Demand is already on the up, and that's before the roll-out of phase two of Help to Buy. It is critical that the supply of property improves so that the goal of a significant increase in transaction numbers is not overshadowed by an unsustainable boom in property prices."

The average house price across Britain was £249,199 in August, according to Rightmove. It said that housing supply has increased just 0.2 per cent this year.

In London, asking prices in Kensington and Chelsea fell 4.7 per cent in August from July. That's a drop of about £110,000 and takes the average to £2.23 million. The city's biggest percentage drop on the month was in Camden, down 6.9 per cent. Across London, average prices are still up 10 per cent in the past year.

Acadametrics, a consultancy, said this month that prices in seven of London's eight most expensive neighbourhoods fell in June as the number of homes bought with cash dropped. Homes in the City of London financial district had the biggest decrease, falling 2.5 per cent. That was followed by the City of Westminster, where prices fell 2.4 per cent.