The majority of homes valued beyond £500,000 are having their asking price shaved before being sold as the property market stalls, latest Royal Institution of Chartered Surveyors data shows.
A net balance of just one per cent of surveyors reported prices increasing rather than decreasing in July, down from seven per cent in June – the weakest reading since March 2013.
The two areas with the largest number of surveyors registering price falls are London and the South East, followed by a smaller number in East Anglia and the North.
Stalled market: Next month could mark the first time the Rics survey enters negative territory for four years
A net balance half of all surveyors in London say property prices have not risen in the last three months, while the South East also recorded a negative reading, the weakest for the region since 2011.
With both areas seeing property values hitting the brakes, next month could see the Rics survey fall into negative territory for the first time in four years.
Average house prices across the UK only remained positive in July because prices remain ‘quite firmly on an upward trend’ in some areas, led by Northern Ireland, the West Midlands and the South West.
The July survey also found that, over the previous two months, there had been a stark gap between original asking price and the agreed selling price, especially at the top end of the market.
House prices: Many surveyors in London and the South East are not reporting prices increasing
For homes marketed at more than £1million, 68 per cent of those surveyed reported sale prices coming in below asking prices.
Of those listed between £500,000 and £1million, 57 per cent had noted sale prices lower than asking prices.
Just over a third said homes marketed at less than £500,000 were sold for less than their original asking price.
Looking ahead: Surveyors still remain positive in the longer term
Sales activity continues to lack momentum and expectations for the coming months are ‘virtually flat’, Rics concludes.
Simon Rubinsohn, chief economist at Rics, said recent tax changes and a lack of new homes after the financial crisis are weighing on the market.
He said: ‘Sales activity in the housing market has been slipping in the recent months and the most worrying aspect of the latest survey is the suggestion that this could continue for some time to come.
‘The flatter trend in price growth is arguably a silver lining but there is no real indication that the housing market will become materially more affordable any time soon.’
Numbers game: The number of properties listed per branch has fallen steadily in recent years
What local experts say
James Gubbins of Dauntons in Pimlico, said: ‘The summer period and market uncertainty has cooled the market and buyers are reluctant to offer.’
James Perris, of Devilliers Surveyors in London, said: ‘The upper tiers and the investment market continue to struggle due to the high transactional costs.
‘Pricing at all levels needs to be competitive to attract buyers.’
Mark Everett, from Michael Everett & Company in Epsom, said: ‘Continuing lacklustre market with obvious signs of slowing before the holiday season.
‘A few more instructions have encouraged some action, but market is desperately price sensitive and too much stock is unrealistically overpriced.’
Meanwhile Kirby O’Connor at Goc Estate Agents in Belfast, Northern Ireland – an area which is more buoyant than the others according to Rics data – said: ‘Market has been strong over the summer, lots of new interest to the market and new listings.’
Halifax: Latest data from the bank shows that values are up almost £5k in the year since the Brexit vote
The Rics data comes in the same week as the Halifax house price index, which showed values are up almost £5,000 in the year since the Brexit vote.
A combination of record low mortgage rates and a lack of homes for sale has bolstered the property market, but the pace of house price rises has slowed considerably.
House prices rose by another 0.4 per cent in July, to take the average home’s cost up a further £789 to £219,266 – 2.1 per cent higher than a year ago.
House prices were down over the three months to July, however, Halifax said, dipping 0.2 per cent from the £220,515 reached in May.
The average home is down £2,924 on the £222,190 peak on the Halifax index at the end of December last year.
House price inflation has fallen from 10 per cent in March 2016.