House prices in London fell for the seventh consecutive month according to a report from Hometrack, and housing economist John Wriglesworth predicts they will continue to fall, giving a 5% drop over 2005.

Mr Wriglesworth said, “London has been hit hard by the price falls over the past six months, and this month shows no signs of an imminent recovery. The Bank of England’s decision to maintain interest rates at their current level has brought a degree of confidence back into the market, but we will continue to see modest falls in the coming months as the market adjusts to a new, more sustainable level."

Hometrack's January survey of the London housing market reveals an average house price fall of –0.4%, following the two previous monthly drops of –0.9% each. This is the seventh consecutive month that house prices in London have fallen with the average London price now standing at £262,900, down from a peak of £275,900 in June 2004.

Activity is down again this month with the number of sales agreed falling by -11.2% (-3.6% in December’s survey). The number of new buyers registered (demand) has fallen by –16%, while the number of properties listed (supply) has fallen by –7.8%. Hometrack’s unique Demand Index shows a surplus of supply relative to demand for the seventh month running.

Properties are taking slightly longer to sell (6.8 weeks compared with 6.7 weeks in December’s survey), while the average number of viewings per sale has reduced again this month to 14.2 (14.5 in December’s survey).

Sales price as a percentage of asking price has decreased slightly this month to 91.8% (91.9% in December’s survey), indicating that buyers are continuing to negotiate attractive discounts of over 8% of the asking price.

This month seven boroughs remained stable or reported price rises compared with just two last month. The top five were Ealing (0.1%), Greenwich (0.0%), Hammersmith & Fulham (0.0%), Haringey (0.0%) and Havering (0.0%). The worst performing boroughs were Barking & Dagenham (-2.0%), Bromley (-1.4%), Hackney (-1.1%), Richmond-upon-Thames (-0.9%) and Wandsworth (-0.8%).