House prices have failed to record any monthly increase for a year-and-a-half, with the pressure on household budgets and the weak economy expected to push them down even further, a study from property analyst Hometrack has found.
But London is predicted to continue to buck the trend, with the Olympics set to heighten the strong interest shown by overseas buyers who consider the English capital a "safe haven" in the midst of the fallout from the eurozone crisis.
The study reported a "slow start" to the year generally, with 10.5% fewer new buyers registering with agents compared with December, 5.4% fewer properties listed and 14.3% fewer sales agreed. House prices remained flat in January, following a 0.2% decrease in both December and November, the latest survey of 1,500 agents and surveyors found.
London is the only area in the study where prices went up, recording a 0.1% increase, while the North East saw the sharpest monthly fall, dropping by 0.4%. The average London property remains on the market for just 6.5 weeks, compared with around three months in the North, the Midlands and Wales.
Across England and Wales, the number of homes coming to market in the last six months has shrunk back by 7%, the sharpest contraction since 2009, with only a "modest" improvement in buyer demand expected over the coming months.
Lenders are expected to tighten their borrowing criteria this year, which could also provide a further hurdle to would-be buyers.
Richard Donnell, director of research at Hometrack, said: "The latest Hometrack survey reveals a market dogged by uncertainty. On a national basis house prices have not increased over the last 18 months - a theme carried over into January when prices were unchanged."
He continued: "London looks set to buck the national trend again in 2012 thanks to overseas buyers providing a boost to prices in London's prime areas."
The report said the relatively strong London market "looks set to continue through 2012 as the Olympics firmly focus the eyes of the world on London, and overseas buyers, in the midst of global uncertainty, continue to consider London a safe haven".
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Hometrack said that sellers are generally achieving 92.5% of the asking price, slightly up from 92.3% in December. The monthly survey looks at the "achievable selling price" of properties, taking recent transactions into account.
