London housing market running out of steam?

Bloomberg has reported that asking prices for London homes fell from a record this month in a sign that buyer concern about overpaying is prompting them to step back from the market. This is according to Rightmove Plc, a property website operator.

Values in London slipped 0.5% to an average of GBP589,77, the first decline this year. Prices in Kensington and Chelsea, Britain's most expensive district, fell 0.3% to GPB2.38 million. Across the UK, they rose 0.1%, a less-than-average increase for this time of year.

Only a third of London's 32 boroughs saw asking prices rise this month. The largest increase was in Westminister, the second-most expensive district, where values climbed 3.5%. Prices in Haringey, north London, plunged 4.8%.

UK home prices have surged in the past year amid near record-low borrowing costs and a strengthening economic recovery. In London, values got an extra boost from cash-rich foreign investors seeking a haven. Rightmove's report showed that UK house prices have risen 7.7% in the past year, with London up 14.5%.

Rightmove's director has cited this month's price decline in London as "an example to the rest of the country of what happens when affordability and common sense get stretched too far". But if our Singapore experience is anything to go by, one swallow does not a summer make. Or in the property sense, one month of price decline does not a cooling London market make. So we shall see...