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London continues to drag on UK house prices

London continues to drag on UK house prices

England — and particularly the South East — continued to drag down the UK's average house price growth in June, according to Nationwide.

Findings in the lender's latest house price index showed the average annual house price growth remained subdued at 0.5 per cent, with a modest 0.1 per cent rise during the month of June.

This meant the UK’s annual house price growth remained below 1 per cent for the seventh consecutive month as prices continued to fall in outer London, the capital itself, and the South East region.

By comparison, growth consistently stayed above 2 per cent — peaking to 3.1 per cent in June 2017 — in the 16 months up to September last year.

On a quarterly basis, outer London was the weakest performing area in the three months to June, followed by the South East, as prices declined by 1.8 per cent and 1.6 per cent respectively.

The cost of property in the capital fell for the eighth quarter in a row, down 0.7 per cent year on year in June.

Moreover, prices in the capital are still only about 5 per cent lower than the all-time highs recorded at the start of 2017.

Elsewhere in England, annual price growth remained relatively modest, with Yorkshire and Humberside, the best performing English region, seeing house price growth of 3 per cent year-on-year.

Northern England continued to out-perform the south, but Robert Gardner, Nationwide’s chief economist, said these trends were not unexpected after several years of sustained outperformance in London and the south which had left affordability stretched.

Prices in Scotland were also subdued with a 0.4 per cent year-on-year rise.

The picture was better for sellers in Northern Ireland and Wales, with annual house price growth rising 5.2 per cent and 4.2 per cent respectively. 

The average UK house price now sits at £215,910, with London remaining the most expensive place to buy and the north the cheapest.

Lucy Pendleton, founder director of independent estate agents James Pendleton, said London’s “dramatic stabilisation” was a “remarkable bounce back from pretty dire quarterly growth figures earlier in the year”.

Ms Pendleton said it was clear the capital’s buyers had perked up as the March Brexit deadline came and went without incident.

Sam Mitchell, chief executive of online estate agent Housesimple, said: “It’s remarkable,  given the heightened political uncertainty in the UK surrounding Brexit, that we are still seeing growth in house prices at all.

“Albeit marginal, this growth demonstrates the resilience of the UK property market, and is a reflection of the underlying more favourable economic factors like low unemployment and low interest rates.”

But Jonathan Samuels, chief executive of property lender, Octane Capital, said political events had “taken the pressure out of the [property market] like a slow puncture”.

He added that if it weren’t for rock-bottom mortgage rates and the strength of the jobs market, the market would likely be showing negative growth.