Fall in UK home prices dims outlook

PUBLISHED : Wednesday, 15 October, 2014, 5:09am
UPDATED : Wednesday, 15 October, 2014, 5:09am

London house prices dropped for the first time in almost four years and the outlook for the city's property market is fading, according to the Royal Institution of Chartered Surveyors.

The institute said its house price index for the capital fell below zero in September for the first time since January 2011, ending a record period of growth. A national index fell to 30 from 39, the lowest in more than a year.

The report also showed London might lag the British market over the next year with price growth of 1 per cent. Respondents expect the average national price to rise 2.1 per cent.

As Britain's property market cools, London is being hit the hardest by measures aimed to curb reckless mortgage lending and the threat of a tax on the most expensive properties. A surge in values in the capital over the past year has stretched affordability and put potential buyers on edge.

"The growing sense of caution seems to have taken a particular toll on the London market," the institute said.