However this does not spell doom and gloom for London's house prices, as the capital's new homes still have a price three times higher than that of the average first-time buyer home (£150,000).
According to the SmartNewHomes.com's monthly index, the average price of a new home in London in December was £420,983. This represented a 4.1 per cent drop in the figure seen in December 2006.
“While there is no denying that London has outperformed any other region in December, our index shows that new homes are cheaper in London now than a year ago," explained David Bexon, MD of SmartNewHomes.com.
"During 2008, London will remain a market with pockets of activity such as the Olympic regeneration zone as well as in key areas such as Lewisham, Brent Cross and Elephant & Castle.”
