Nationwide BS  

London property prices have fallen

London property prices have fallen

London was the UK's weakest performing region for house prices for the first time since 2004 in 2017, according to Nationwide.

The building society reported house prices in the nation’s capital city were down 0.5 per cent year-on-year in 2017.

Robert Gardiner, chief economist of Nationwide, said: "The significant disparity in house prices across the UK has been a recurring theme in recent years. 

"In this respect, 2017 saw the beginnings of a shift, as rates of house price growth in the south of England moderated towards those prevailing in the rest of the country."

Overall, Nationwide reported UK house prices grew by 2.6 per cent last year compared with a 4.5 per cent increase in 2016.

Mr Gardiner said mortgage rates and healthy employment growth continued to support demand in 2017, while supply constraints provided support for house prices. 

However, he said this was offset by mounting pressure on household incomes, which exerted an increasing drag on consumer confidence as the year progressed.

Jonathan Samuels, chief executive of lender Octane Capital, said not so long ago it would have been inconceivable for London to have been the only region not to have delivered positive returns in a calendar year.

He said: "It has been 13 years since London was last the weakest performing region, and the capital will certainly feel unlucky.

"London, without doubt, has been a victim of its own success. Prices reached absurd highs and it is now paying for its irrational exuberance.

"2018 is likely to be a mirror image of 2017, with the property market held back to low single digit growth by no end of political and economic uncertainty. 

"But longer term, this will be to the benefit of the market as a whole. 

"The fact that it takes roughly eight years for the average buyer to save for a deposit, and 10 in London, underlines the affordability crisis many people face. 

"Saving for a deposit, in a low interest rate and wage growth environment, is nothing short of brutal.

"Prices won't fall in 2018 because of the continued lack of supply and low cost of borrowing."

Jonathan Harris, director of mortgage broker Anderson Harris, said the majority of first-time buyers he helps have some sort of financial assistance from the Bank of Mum and Dad. 

He said: "Getting the deposit together is still the biggest challenge for most first-time buyers and even a slowdown in property price growth is not enough to make the difference between being able to get on the property ladder or not, particularly in London."