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LONDON-Estate agent Chesterton says that the London housing market weakened further during the second quarter of 2003. Prices across London fell by 2.8% in the three months to the end of June 2003, the third quarterly fall in a row.

Most areas of London saw price falls of between 1% and 3%, for both houses and flats. In the west and south-west of London prices fell by 2.7%, and in central London, prices dipped by 2.9%. The eastern area around Docklands and Tower Bridge fell least this quarter with prices down by 1.9% compared with March.

This quarter, prices of flats fell less than house prices. London-wide the fall was 1.7% compared with 3.3% for houses.

Over the last year, prices have fallen by 7.3%, with houses (-7.9%) faring worse than flats (-6%). Generally, the more expensive properties have seen bigger percentage falls in value. However price falls have spread to almost all areas and values over the past six months. The worse performer in the last 12 months was east London, where prices have fallen by nearly 9%, south and west London fell by 8.5% and central London by 6.8%.

Rental values across London fell by 1.1% during the second quarter of 2003. Rents have been falling for the last two years and are down by over 15% since the recent peak.

In central London, rental values of flats fell by less than houses, the reverse of the situation in east, south and west London. Houses in east London were the only sector not to record a fall this quarter, however this follows a sharp downward revision in the last quarter of 2002.

Residential investment yields again showed little movement as prices fell marginally more than rents. London-wide gross yield edged out from 4.9% to 5%.

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