House prices across the country have fallen by 3.2% in the last month, according to property website Rightmove. And the biggest losers by a distance were homeowners in London, where prices plunged nearly 7% - meaning that the average house has lost £28,000 in value in the last four weeks or so.
Worst hit was the affluent borough of Kensington and Chelsea, where house prices fell at around £20,000 a week. Since the average price is now £1,572,814, it’s not as though borough residents will drop below the breadline, but there’ll still be a few people choking on their croissants and smoked salmon when they read the figures this morning. Even up-and-coming areas like Hackney saw big falls – though admittedly it’s still 41% up for the year as a whole.
The problems in the credit markets are clearly one reason for the decline – with lenders struggling to raise funds and buyers nervous, it’s no surprise that people are taking a more cautious approach. Rightmove said the introduction of Home Information Packs had also distorted the market slightly, particularly in London. Sellers have been rushing their houses onto the market to avoid the recent deadline, often below the going rate.
Of course, not many people try to sell their house in December anyway. Rightmove’s Miles Shipside said today that it was 'wrong… to speculate that prices will continue to fall based on one month’s statistics from a quiet December'.
So what does the business community think about it at all? The CBI, which isn’t exactly renowned for putting a positive spin on things, has admittedly downgraded its economic growth predictions for 2008, citing the credit crunch and rising commodity prices. Otherwise it’s feeling reasonably optimistic. Chief economic adviser Ian McCafferty said today that ‘the fundamentals of our economy remain sound and talk of a full blown recession is overstated’.
So no need to sell that two-bedroom townhouse in Chelsea just yet, then...