House prices in London often lead the way for the rest of the market and the capital has seen prices falling since 2016 after over five years of high growth.

But will the falls spread to the rest of the UK, and has the rippling effect started already?

A report by Hometrack suggest that the price falls have already spread out from the capital into Southern England.

The property portal found that over a third of homes in the South are currently in markets with annual price falls, concentrated in higher value areas.

And there are signs the negative trend is even reaching the Midlands.

Small falls

However, while the spread of falls is wide, the actual level of property price falls is still very low, and Hometrack said it expects the re-pricing process in regional markets to be more short-lived than in London.

The property firm noted that current price declines are small compared to 2009, when there were double-digit price falls. The vast majority of markets in London are registering annual price falls of less than 5%.

“The reality is that the reductions in residential values over the last three years are best described as a modest retrenchment in prices,” said Richard Donnell, author of the report. “This is to be expected after a strong growth phase as the market adjusts to weaker demand brought about by stretched affordability levels and a slew of tax changes between 2014 and 2017.”

In the South of England, annual price falls are even lower, at less than 2.5%, while in the Midlands there has been a very small increase in markets registering annual price falls – concentrated in higher value areas.

Marc von Grundherr, director of Benham and Reeves, said: “London will always be the driving force of the UK property market but just as it leads the way when price growth is buoyant, the same can be said when price growth in the capital drops a gear.

“We are currently seeing this in the South East and other surrounding markets as those within arms reach of the capital often find market sentiment impacted by the same influences due to the property market ripple effect.”