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Top of the market to you - but are we now on the way down?

Perhaps the signs were there but figures now seem to be confirming it: has the housing market reached the summit of its latest cycle and if so, will prices be heading for a 'correction' or a full blown slump in 2018?

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The writing appears to be on the wall for London, which will come as no surprise to many commentators who have been highlighting that the disparity between averages in the capital and the rest of the country have been getting too wide.

The average house price in London is now nearly twice that of the UK average. It has been widely reported that over threequarters of a million people in the UK have become, in effect, 'property millionaires' having seen accelerated growth in property values in recent years.

According to the latest house price data from Acadata, London has now experienced the sharpest fall in values, with a significant drop off of 4.3% in the final quarter of last year.

It is feared that this is the beginning of an official downturn which is being fuelled by other economic factors such as Brexit, fears over inflation and the Bank of England's warning that interest rates may rise earlier and more steeply in 2018 than previously predicted.

According to Acadata, the housing market has now seen eight consecutive months where the annual rate of increase in property values has decreased. That could be described as a trend, but there is a difference between slower growth and new reports of real decreases in value.

January's figures are ominous even in the context of a sluggish new year and the hangover of ongoing economic woes. Estate agents are quick to say that January is the new 'spring season', a busy time for buyers and sellers, but there is a feeling this year that many are now waiting to see what happens next.

The latest data indicates that annual UK house prices dropped by 0.4% in the first month of the year, primarily due to a lack of demand which is prompting sellers to lower asking prices to stimulate market interest. More significantly, this is the first time since 2012 that the annual baseline figure has decreased.

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London's figures are the poorest since the dark days of the financial slump in 2009. But at some point there was bound to be a downward turn, and there are plenty of economic pressures to push the market in that direction.

Three factors give housing market analysts the collywobbles at the moment: inflation, interest rates and Brexit.

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