London house prices are flagging behind the rest of the UK, rising at the weakest rate in five years.
New information from Nationwide has revealed that annual price growth in the capital dropped to just 1.2 per cent between April and June, down from 5 per cent the previous quarter. This marks the slowest growth since 2012, falling way beneath the 2.8 per cent average rise across the UK as a whole.
Of the 13 regions examined, just the North East and Cumbria examined a slower rate of price growth, at 1.1 per cent.
Nationwide’s chief economist, Robert Gardner, argued however, that the change is relative, with prices in London slowing from a high start point. House prices in the capital remain 56 per cent higher than the pre-crisis peak of 2007, significantly higher than the 13 per cent across the rest of the UK.
He said: ‘There has been a shift in regional house price trends. Price growth in the south of England has moderated, converging with the rates prevailing in the rest of the country.’
East Anglia saw the strongest house price growth, up 5 per cent on a yearly basis. Nationwide has predicted that UK house price growth will slow to about 2 per cent in 2017, from 4.5 per cent in 2016.
The house price gap across the UK is narrowing, yet still significant. The average price of a home in London is £478,142, compared with £125,237 in the north.
Gardner continued: ‘Given the ongoing uncertainties around the UK’s future trading arrangements, the economic outlook remains unusually uncertain, and housing market trends will depend crucially on developments in the wider economy. In our view, household spending is likely to slow in the quarters ahead, along with the wider economy, as rising inflation squeezes household budgets. This, together with ongoing housing affordability pressures in key parts of the country, is likely to exert a drag on housing market activity and house price growth in the quarters ahead.’