This is according to the latest LSL/Acadametrics House Price Index which also showed that mortgage lenders injected almost 20% more finance into the market in December 2011 than they did at the same time in 2010.
Commenting, David Brown, commercial director of LSL Property Services, said: “Prices edged down in January, dropping further than the normal seasonal slowdown we expect to see in the first month of the year.
“This means prices are now falling at 1.4% on an annual basis - the fastest rate of decline since September 2011. This has been driven by growing concerns among property buyers about the state of the global economy - especially the extent to which the eurozone crisis will slow the market.
“The market is being buoyed by cash buyers – especially for high-value properties in the South-East – who see British real estate as a safe haven from global financial woes. As a result, prices in London have bucked the national trend, not falling in any of the last six months, and growing annually by 3%.
“Despite the relatively slow movement of prices, transaction numbers rose sharply in the final months of last year. This was driven by the increasing availability of mortgage finance.
“The largest increase in transactions was in the North, while the smallest rises were in Wales and London – the only two regions to have seen price increases over the last year.
“This shows transactions are being held back in areas where prices are rising by the limited number of properties up for sale, but that an excess of for sale property in other regions has had the opposite effect.
“Sellers in areas where prices are growing are therefore charging a premium due to the scarcity of properties on the local market and buyers elsewhere have an excellent opportunity to secure affordable properties.”
Dr Peter Williams housing market specialist and chairman of Acadametrics, commented: “January is traditionally the quietest month of the year for residential property sales, so perhaps one should not place too much emphasis on the month’s average house price fall of -0.2%.
“The quantum of the fall is small and this, coupled with low transaction numbers, suggests that, when all the month’s transactions are reported, there will have been relatively little change in the average price at the national level over the last month.
“On an annual basis, average property prices have fallen by -1.4%. This is the ninth month in which prices have fallen in nominal terms.
“The decline has grown from the -0.9% fall recorded last month; the apparent sizeable fall this month being a consequence of price changes a year ago. We anticipate that, for the same reason, we may see a fall of -2.5% in the annual rate, to be recorded next month.”
