Nationwide has released new figures to show London house prices have fallen for the first time in eight years.
The average London house price was down was 0.6 percent between July and September compared to the same period last year. The capital found itself to be the weakest performing region in the UK for the first time since 2009.
“House price growth rates across the UK have converged in recent quarters,” said Robert Gardner, Nationwide’s chief economist.
“Annual growth rates in the south of England have moderated towards those prevailing in the rest of the country. London has seen a particularly marked slowdown, with prices falling in annual terms for the first time in eight years.”
The average London price would set you back £471,761. This is compared to East Midlands where an average house costs £177,822. In the region, house prices increased by 5.1 percent – the strongest result.
“It shows the north-south divide in reverse, and confirms what we have been seeing on the ground – that the London market is struggling, mainly for affordability reasons,” said Jeremy Leaf, a London estate agent.
The Bank of England has recently proposed increasing interest rates, which are currently at an all-time low of 0.25 percent. Gardner said this would not put any added pressure on homeowners.
“Providing the economy does not weaken further, the impact of a small rise in interest rates on UK households is likely to be modest. This is partly because the proportion of borrowers directly impacted will be smaller than in the past,”
“In recent years, the vast majority of new mortgages have been extended on fixed interest rates. The share of outstanding mortgages on variable interest rates has fallen to its lowest level on record, at about 40%, down from a peak of 70% in 2001,” he added.