Average asking prices in London have been slashed by £6,238 in December, according to Rightmove.
House prices have fallen another 0.9 per cent, down to £667,019 from £673,257 in November.
It now takes 71 days on average to sell a house in London, the longest period since January 2023.
North London estate agent Jeremy Leaf said the figures were unsurprising, as sellers are being forced to be more realistic to attract buyers in the current market.
"Overall, sales agreed are down as transactions are inevitably taking longer bearing in mind weaker demand and higher base rates," said Leaf.
With the Bank of England holding the base interest rate at 5.25 per cent, higher mortgage costs mean buyers have smaller budgets.
"'With many buyers sitting on their hands and waiting for the right opportunities to come along, sellers who are keen to sell have had to reduce their pricing in many instances," said Tomer Aboody, director of property lender MT Finance.
At a borough level, Hillingdon saw the biggest drop in asking prices month-on-month at 3 per cent. The area recently came bottom of Rightmove's Happy at Home Index.
Asking prices dropped 2.3 per cent in Southwark and in Hounslow.
Boroughs where asking prices were up since last month include Westminster, where they rose 2.4 per cent, and Wandsworth, where they went up 1.8 per cent.
Asking prices down across the country
Across Britain, the average price tag on a home tumbled by nearly £6,966 in December, according to a property website.
The average asking price for a home coming on the market fell by 1.9 per cent this month, reaching £355,177, Rightmove said.
In November, the average asking price was £362,143.
Rightmove said that prices tend to fall in December, as Christmas approaches.
But this month’s drop is bigger than the past 20-year average of 1.5 per cent, as sellers look to price attractively to secure a deal.
The fall is partly driven by more new sellers looking to price below the competition now that the pendulum has swung towards a buyers’ market, Rightmove said.
Mortgages finally begin to fall
On Friday last week, financial information website Moneyfactscompare.co.uk reported that the average two-year fixed-rate homeowner mortgage on the market had fallen below 6 per cent, for the first time in nearly six months.
Some commentators have suggested that this could help bring more activity back into the housing market.
“Further price falls beyond the usual seasonal trends that we’d expect at this time of year signal that some new sellers are continuing to act on the advice of agents to price competitively," said Tim Bannister, Rightmove’s director of property science.
“We entered this year under a cloud of uncertainty, as the fallout from the autumn mini-budget filtered through to lower activity levels. High mortgage rates which have added to already-stretched buyer affordability have been a challenge throughout 2023 and this is likely to carry into next year.
“However, for now, there appears to be more calm and certainty heading into 2024, and the annual fall of 1.1 per cent in asking prices highlights the market’s much-better-than-predicted resilience this year.”
2023 closing out "better than expected"
The number of sales agreed in the year to date is 13 per cent behind the same period last year, according to Rightmove.
It said this is a better-than-expected figure, given that the 2022 market was much more frenetic, and three of the 10 strongest months on its records for buyer demand happened in the first half of that year.
While, across Britain, asking prices have fallen by 1.1 per cent compared with last year, there is a mixed picture geographically, highlighting the need for sellers to price in line with their local market trends.
Rightmove also said it is seeing early signs of more activity in the family mover market, although it added that first-time buyers will also be needed to keep the market moving and form the bottom of chains.
Bring on Boxing Day browsers
The website predicts that average asking prices will drop by 1 per cent across Britain in 2024.
“With mortgage rates more settled and on a slow downward trend, potential movers who have been biding their time and waiting for calmer market conditions may decide to act in the early part of next year," said Bannister
"Indeed, there’s always a big post-Christmas upturn in Rightmove traffic, with early-bird buyers starting their search on Boxing Day.”
Boxing Day browsers aren't all just dreaming of a new home during the holiday lull, said Leaf.
"Boxing day is always a great time for attracting interest on the portals," he said.
"Although much interest is aspirational, we always find plenty of genuine interest too."
