Weakness in London house prices was the biggest contributor to slow house price growth, regional analysis of the Halifax house price index has shown.
IHS Markit said that weakness in the capital was now spreading to commuter areas beyond the M25, with property prices across the wider south east increasing at the slowest annual price since the end of 2012.
“London’s soft patch has clearly magnified the slowdown in UK house price inflation since 2016, but this weaker trend is not exclusive to the capital,”said Tim Moore, chief economist at IHS Markit.
“A generally cooling UK housing market appears to have emerged so far in 2017, driven by affordability constraints, pressures on household finances, greater caution among buyers and the fiscal squeeze on buy-to-let.”
The Halifax figures show a 2.4 per cent increase year-on-year in the second quarter of 2017, compared with a 3.6 per cent increase in the first.
This is the slowest annual rate of house price growth since the first quarter of 2013.
However, that figure masks regional variations, with London among the weakest performing areas for house price growth throughout the year-to-date.
At 0.8 per cent in the second quarter, the latest annual rise placed the capital in the bottom third of UK regions.
Only Scotland (minus 4.2 per cent), the north of England (minus 1.2 per cent) and the west Midlands (0.3 per cent) saw weaker price momentum than London in the second quarter of 2017.
The East Midlands was a notable outperformer, with prices up 9.7 per cent year on year.
Mr Moore said that it is 10 years since UK house prices reached their pre-financial crisis peak.
“Despite signs of weakness in 2017, by far the greatest rises in standard house prices since the onset of the global financial crisis have been in London,” he said. Prices in London have risen 43 per cent since the crash.
“In cash terms, the gap between standard house prices in London compared to the UK as a whole has almost doubled in 10 years”.
Oliver Marley, from London-based mortgage and financial advisers Independent James, said that the London market was leveling off.
He said: "You're not seeing the £100,000 a year increases any more, but they were not sustainable anyway. It is steady, and and those properties worth a million pounds or more have come down a bit."
rosie.murray-west@ft.com
