Property values in the capital fell by 1.9 per cent year on year during the spring quarter, according to lender Nationwide, compared with the one per cent dip recorded in the first three months of the year.
Prices have now been in reverse for four consecutive quarters and have not dropped at this pace since Autumn 2009 when the market was still reeling from the impact of the financial crash.
The latest decline means the average London homeowner has seen £9,297 wiped from the value of their property over the past year, making it worth £468,845.
However, some property experts said the situation on the ground on London is even worse than the Nationwide figures suggest.
Property buyer Henry Pryor said: ”Nationwide is giving us the equivalent of the weather ten days ago. The real picture is that the housing market is far more perilous than it was for sellers negotiating deals in June.
“I would say prices are down five per cent year on year in London. I have just agreed a deal for a property in Maida Vale that was on at £2.25 million in 2016 for £1.7 million.”
The number of transactions is also dramatically down with just 5,411 deals completed in February — the last month for which Land Registry figures are available — down 24 per cent on 2017.
Howard Archer, chief economic advisor to forecasters the EY ITEM Club, said there was no sign to an end of the downturn in the market with buyers’ “firepower” limited by the squeeze on household incomes that followed the Brexit Referendum.
It comes despite a succession of measures from the Government designed to shore up the property market. In last November’s Budget Philip Hammond abolished stamp duty for first time buyers on the first £300,000 of purchases of homes worth up to £500,000.
But Mr Archer said: “The fundamentals for house buyers are likely to remain challenging. Consumers have faced an extended serious squeeze on purchasing power, which is only gradually easing. Additionally, housing market activity remains hampered by relatively fragile consumer confidence and a limited willingness to engage in major transactions.”
“House buyers will also likely be concerned about further interest rate hikes over the coming months. We suspect that the Bank of England is more likely than not to increase interest rates in August, although it could be delayed until November.”
London was the only region in the country with falling prices, according to Nationwide. Nationally they rose by 2.2 per cent to an average of £214,578.
But despite the fall prices in London are still 50 per cent above their previous peak in 2007 just before the “credit crunch” that preceeded the full scale banking crisis.
Property market experts said it was unlikely that the weakness in the London market would turn into a 1990s-style crash while interest rates stayed low and the supply of homes for sale remained so limited.
Jonathan Samuels, chief executive of lender, Octane Capital, said: “While annual prices overall are edging down, they can only go so far given the fundamental lack of stock. Along with weak supply, the strength of the jobs market and continued low borrowing costs will continue to support the market and drive transactions.”