FALLS in house prices outweighed increases last month for the first time since the aftermath of September 11. The weak market in the South is dragging down the more buoyant North.

A clear line is emerging from the Wash to the River Severn, dividing the red counties, where prices are still rising, from the blue ones, where the market has cooled since last year’s boom.

Figures from the property database company Hometrack, based on reports from 4,000 estate agents, show prices falling most quickly in wealthy areas of the South East. The counties recording the biggest price falls last month were Oxfordshire, West and East Sussex, Berkshire and Surrey.

In parts of the Berkshire commuter belt, prices fell by 2.5 per cent last month as nervous buyers lowered their offers or pulled out. It is now taking up to ten weeks for sellers to find a buyer in parts of Berkshire and Surrey, and the average price agreed is 10 per cent below the asking price.

There are also pockets of the South West, such as Dartmouth in Devon, where houses are struggling to sell. War in Iraq and gloomy economic news caused sales to drop by 25 per cent last month.

It is a different picture in the North East. Prices rose by 0.4 per cent in Teesside and 0.6 per cent in Co Durham as buyers continued to take advantage of cheap mortgages and affordable prices. The market also continued to improve across Wales, with increasing numbers of new buyers pushing up prices.

The decline overall is the result of a sharp fall in demand coupled with a steep rise in the number of properties for sale. Supply grew by 8 per cent in England and Wales last month, compared with an increase of less than 1 per cent in the number of new buyers.

The gap between supply and demand was wider in the South. In East Anglia, the number of houses for sale rose by 12 per cent. Buyer numbers grew by less than 2 per cent.

John Wriglesworth, Hometrack’s housing economist, said that the cooldown was likely to continue in areas where property had become too expensive. “The North-South divide is more marked than ever, and this trend will continue,” he said.

The Hometrack survey echoes the most recent report from the Royal Institution of Chartered Surveyors, which highlighted the North-South divide. But it paints a different picture from the March reports from Halifax and Nationwide. They showed prices continuing to rise strongly through the first quarter of the year.

However, both lenders said that the growth was unlikely to last much longer. Their figures reflect a timelag in reporting rather than a different view of the market. Nationwide will publish its figures for April on Thursday. House prices in Central London have fallen for the ninth month in succession. The average property is worth £13,000 less than in July last year. London estate agents report a slight improvement in the market in the past few weeks.

With the war and the Easter holidays over, they expect activity to pick up, but foresee no improvement in the prices.

Explore UK News

• Crime News

• Education News

• Health News

• Science News

• Scotland News

Times Recommends

• Donor organ allowed child’s own heart to heal
• Michael Jackson: Not the final chapter
• Brüno toned down for 15 rating