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London house prices fall for first time in two years


The average house price in London has fallen for the first time in almost two years, according to a report by Hometrack.

Prices in London have continuously increased at unprecedented levels over the last two years, but demand finally appears to have levelled off.

The decline in London house prices was recorded at 0.1%, whilst the rest of the UK housing market stalled and recorded 0% growth.

Throughout the UK, demand for homes fell by 2.1% in September, which is a surprise as it is usually a strong month where demand grows.

It was claimed in the report that the factors causing house prices to falter included a combination of over-inflated prices, slow wage growth, stricter lending mortgage conditions as a result of the Mortgage Market Review (MMR), as well as a potential interest rise increase.

Despite house prices either falling or stalling throughout most of the country, there were a few areas that recorded very modest growth. These areas were Yorkshire and the Humberside, the South East and the North East.

Chill in the air

Richard Donnell, director of research at Hometrack said that the news has created a “distinct chill in the air” this month.

He said: “After a strong run over the last 18 months, the momentum of house prices rises has started to turn with growth now at a standstill for the first time since January 2013”.

It has been claimed that rising house prices in the city of London could create a severe housing crisis, that could result in people moving away from the city.

A YouGov poll recently revealed that half of those living in London believe they’ll leave the city if house prices continue to increase, and lobbying groups have started to raise their concerns.

Baroness Jo Valentine, chief executive of lobbying group London First warned: “We could be storing up major problems for the capital if we don’t address this. There will come a time when people will not keep travelling across counties and continents to make London the vibrant world city it is if they can only afford to live in a box or have to travel hours to get to work.”

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