The “red warning lights” are flashing on the property market, Home.co.uk claims, as supply hits a seven-year high in London and the south-east this month.
The property search engine is warning that over-supply of properties threatens to tip the downturn into disaster in London and the south-east.
The fear is that this then spreads to the rest of the UK, with Home.co.uk warning that the east of England property market – where asking price growth has fallen below inflation at 1.5% – could be next.
Home.co.uk’s latest Asking Price Index shows supply is up 5% annually in London, 14% in the south-west, 16% in the south-east and by 17% in the east of England.
The typical or median time on the market has also surged, increasing by 15% in London to 77 days, 18% in the south-east to 66 and 63% in the east to 63.
In contrast, the typical time on the market across England and Wales was recorded at 78 days this month, Home said, with supply up 8% overall.
Asking prices rose in all parts of the UK except London, the north-east and south-east of England, leaving average values up 1.3% to £306,724, compared with a 3% increase in April 2017.
Doug Shephard, director of Home, said: “Home prices may have nudged up this month across England and Wales but red warning lights are flashing as market conditions in London and the south-east deteriorate.
“Prices continue to slide and marketing times are rising but, most worrying of all, is that the supply of property for sale has risen to near seven-year highs in both regions, and this rising trend shows no signs of abating.
“In stark contrast, Wales, the east midlands, west midlands, the north-west and Yorkshire have thriving property markets.
“The reversal of fortunes continues for Britain’s bipolar property market. Over-supply threatens to tip downturn into disaster in the already hamstrung markets in Greater London and the south-east.
“The psychology of property market downturns is well documented and buyer sentiment may be summarised by the phrase, ‘Who wants to catch a falling knife?’
“Moreover, the east of England looks set to follow the same path as supply rises rapidly, marketing times lengthen and price growth falls further below the level of inflation.”