The Home website, which publishes a detailed monthly snapshot of the market, has raised the alarm over London because of a rapid build-up on unsold stock in the capital.
The website says the rest of the UK’s housing market is beginning to calm slightly after the frenzy of recent months, helped by the decision by government to allow the market to remain open in the second lockdown in England.
However, the latest report from Home says: “Demand in Greater London … has failed to keep up with supply over recent months, resulting in a rapid build-up of stock on the market. This bodes ill for the capital region and home prices are looking increasingly fragile, burdened by the growing glut of inventory. The desirability of central London's bricks and mortar has taken a severe tumble in the wake of the first Covid lockdown; consequently, the most urban locations are now experiencing a period of price rediscovery.”
It continues by saying that London's sales stock levels have rise by 58 per cent since May and, owing to a further record number of new listings in October - also a 13-year record total - “the capital's woes look set to worsen.”
It says the situation is worsened further by a simultaneous over-supply in the London rental market, which has led to rapidly falling rents. Within Greater London there has been a 68 per cent surge in the number of properties to let.
This may all “have created the conditions for the perfect storm” says Home.
The rest of the UK, however, is enjoying a relatively slow and controlled easing back from its autumn frenzy.
A feared over-supply in the South East and South West regions has eased “indicating that these regions may well be spared a price correction in the near term while significant demand remains.”
It adds: “Similarly, respective supply surges post-lockdown in the East and West Midlands crimped further price growth but demand, perhaps also boosted by the London exodus, has been sufficient to deal with the new inventory.”
Yorkshire and the North West are the current strongest parts of the regions, posting annual house price gains of 9.0 and 8.9 respectively. The North East is almost as strong with annual gains of 6.7 per cent.