For years, the UK housing market, and especially the London real estate bubble - just like junk bond spreads - appeared invincible. And, just like the US junk bond bubble, it burst in November, when UK housing prices fell from a year ago for the first time since 2011, with the decline led by London and more expensive properties across the country. According to Rightmove, the average asking prices slipped 0.2% to 302,023 pounds, or $387,000, the first annual drop in 7 years. 

The drop was even more pronounced on a monthly basis: in the largest November drop in prices since 2012, Rightmove said the average price of property coming to the market was down by 1.7%, or £5,222, on the month alone. The biggest falls were in London, where the typical asking price fell by £10,793 (a fall of 1.7%) and in the south-east of England, where prices were down £8,647 (2.1%).

In Greater London, asking prices fell 2.4% annually to 614,271 pounds, while homes located within Transport for London’s Zone 1, the center of the city, fell the most with a 6.9% retreat on the year to an average of 1.3 million pounds. The declines aren’t as dramatic further from the center, where average prices are lower. Values in the outer-most Zone 6 actually rose 3.1% from a year ago.

The biggest price drop was in London, where the typical asking price fell by £10,793 (1.7%). Photograph: Guardian

“Stretched buyer affordability and the cooling markets in the south and in upper price brackets have combined with the ongoing political uncertainty to change pricing optimism into pricing realism,” said Miles Shipside, a director and housing market analyst at Rightmove.

The property market in Britain is weakening after a three-decade boom in which price growth vastly outstripped wage gains, Bloomberg reports. The decline is the result of a reverse “ripple effect”, where rising prices in London spread around the rest of the country during the boom years, has now reversed, said Rightmove, with falling prices in the capital now spreading across the south.

“Higher-end, former hotspot towns are now among the biggest annual fallers with Rickmansworth (-7.1%), Esher (-6.4%) and Gerrards Cross (-6.0%) now cold spots following price rises of nearly 40% over the seven preceding years,” said Miles Shipside of Rightmove.

According to the Guardian, anecdotal reports suggest the market is in even worse shape than the numbers indicated: sellers are listing their property but receiving hardly any viewings and it is taking much longer to find a buyer are supported by the Rightmove data. The real estate website found that the average property takes 61 days to sell, up from 56 days earlier this year, while inventories are swelling with the number of properties on the books of the average estate agent rising to 52, compared to 42-47 earlier this year.

The figures echo data from surveyors earlier this month, which said the property market is at its weakest since 2016. The Royal Institution of Chartered Surveyors found that prices were flat or falling across half of the country, with sales “in limbo” until a Brexit deal emerges.

The uncertainty around the outlook for the U.K.’s divorce from the European Union is also making buyers more cautious and prompting sellers to be less ambitious with asking prices.

Meanwhile, the debate among some estate agents is how to cut asking prices without precipitating a market crash. Richard Freshwater, of Cheffins in Cambridge, tells buyers that it is better to make a single, large cut in price rather than lots of small cuts.

“The key is to drop the price by enough to bring in a new set of buyers within a new bracket. The mistake often made by sellers is to reduce the price on consecutive occasions which can have a damaging effect and put buyers off.”

But whether prices drop gradually or all at once, the data is clear: prices are coming down.

Separate research in October from the website Zoopla found that 38% of properties currently on the market have been marked down in price, with Brighton highest at nearly 47%. It said sellers in the seaside city are having to knock an average of £28,000 off the asking price to achieve a sale.

And with sellers scrambling, buyers have all the leverage. Sarah Coles, personal finance expert at Hargreaves Lansdown, said market power lies in the hands of buyers who are able to strike quick deals. “The property market hates uncertainty, so regardless of what happens next in Brexit terms, buyers may lose some of their enthusiasm, sellers may be reluctant to put their homes on the market, and we could see continued sluggishness in the market."

"It’s a buyers’ market, so you should be able to get the kind of discount that shields you from the risk of further drops in the market."

While that is a valid point, good luck finding a seller who is willing to chop off 20% of their asking price to provoke enough interest and create a "discount buffer" that sparks buyer attention.

Meanwhile, as the Guardian cautions, with Brexit negotiations at maximum uncertainty, and concerns of a hard Brexit rising, "the property market is likely to remain moribund this side of Christmas." Of course, if the Brexit negotiations stretch into the new years, it is anyone's guess how much further the US housing market will drop.