Fall in London property prices

The latest house price index from the Financial Times shows the price of an average UK home increasing by 0.1% in January.

The monthly survey, which is carried out by Acadametrics, also indicates that a weaker property market is now affecting London, which had previously appeared to be resilient to the overall downturn in house prices.

The index has revised previously reported rises in November and December, putting annual house price inflation at 6.5% at the end of January, down from 7.4% in December and 10.5% in August 2007.

Turning to London, house prices fell by an average of 0.1% in January. However, the overall drop should be seen alongside wide variations between the capital’s boroughs; in Kensington and Chelsea, house prices have risen by 29.6% in the past quarter.

Across England and Wales there is also wide variation amongst regions: eight regions, including London, showed negative growth in January.

Peter Williams, chairman of Acadametrics, describes the outlook for 2008 as “challenging”, but points out that price falls must be seen in the context of the high property inflation of the last few years.

He adds:“It would take a far more significant shift in prices than we have seen so far to raise the spectre of negative equity.”

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