House price growth continued to slow in June, dropping to its lowest annual rate since August 2013.
The latest UK House Price Index showed average house prices increased by 3 per cent in the year to June - down from 3.5 per cent in the year to May.
The Office for National Statistics said the slowdown over the past two years was driven by the south and east of England - with house prices in London falling by 0.7 per cent over the year.
Jonathan Samuels, chief executive of property lender Octane Capital, said the fact London’s annual growth rate was at its lowest level since September 2009, when the UK economy was reeling from the global financial crisis, underlined the weakness of the capital's property market.
He said: "The London property market has gone from hero to below zero in a matter of a few years - for the capital to be in a photo finish with the north east over the past year is a stark reminder of how volatile the UK property market can be in the short term."
Mr Samuels said households were also wary of taking on more debt, all the more so following the recent interest rate rise, which could further undermine sentiment.
Seasonally adjusted, average house prices were unchanged at 0 per cent between May and June 2018, compared with a seasonally adjusted increase of 0.5 per cent last year.
Within the figures, new build property saw an annual increase of 9.6 per cent and a monthly change of 3.8 per cent - a growth Lee James Pendleton, founding director of estate agents James Pendleton, said was the most troubling number in the index.
He said: "The new build market is still raging like a furnace and the resulting annual growth figure is calling out the popularity of the Help to Buy scheme like a weather vane in a hurricane.
"It is true that new builds only account for a relatively small number of transactions but such strong numbers do skew the overall picture and raise concerns about the value for money those using the scheme are getting."
Mr Pendleton said the 9.6 per cent house price growth for new builds was in marked contrast to the cost of homes bought by first-time buyers which have only risen 2.8 per cent over the past year.
He said: "The big question is what happens to prices when the property market’s own version of quantitative easing is taken away?"
In June the Halifax house price index reported similar flatline figures in annual rate growth but last week suggested these rates picked up again moving into July.
rachel.addison@ft.com
