Published: Sat, September 30, 2017
Economy | By Melissa Porter

London 'worst-performing' house price region for first time since 2005

London 'worst-performing' house price region for first time since 2005

Values edged up by 0.2 per cent from August, with annual growth at two per cent.

Across the United Kingdom as a whole, house prices rose 2.0 per cent year-on-year, marginally below the 2.1 per cent registered in August and the weakest increase since June 2013.

London was named as the UK's weakest performing region for house price growth in the three months to September, in the latest House Price Index from Nationwide.

That dip in annual inflation came as the average home fell by £379 in value in September to stand at £210,116.

In month-on-month terms, house prices rose by 0.2 per cent in September after falling by 0.1 per cent in August. The stable price rise is thanks in part to high employment and low mortgage rates.

Record-low interest rates had supported the market, Nationwide said.

House prices in the capital were down 0.6 per cent for the quarter, compared to the same period a year ago. Annual growth rates in the south of England have moderated towards those prevailing in the rest of the country.

London 'worst-performing' house price region for first time since 2005
London 'worst-performing' house price region for first time since 2005

"London has seen a particularly marked slowdown, with prices falling in annual terms for the first time in eight years, albeit by a modest 0.6 per cent". This was the first time London was the weakest performing region since 2005.

Northern Ireland saw a softening in annual growth to 2.4%, from 3.8% the previous quarter, while Wales saw a pick-up, from 1.4% the previous quarter to 2.6%.

Robert Gardner, Nationwide's chief economist, said: "House price growth rates across the United Kingdom have converged in recent quarters".

Prices are still on the rise for the rest of the country, with the East Midlands seeing the greatest price increase.

Peter Williams, executive director of The Intermediary Mortgage Lenders Association (IMLA) said speculation on an interest rate rise has not interrupted the fall in mortgage rates, boosted by the Term Funding Scheme (TFS).

We would expect a modest rise in Bank Rate, by itself, to have only a modest impact on economic activity. "For example, on the average mortgage, an increase of 0.25% would increase monthly payments by £15 to £665 (equivalent to £180 per year)". "A modest rise around 2% also looks likely in 2018".

The National Association of Estate Agents reported home sellers hit a 12-month low in August, with sales to first-time buyers dropping to 23% in August from 30% in June in the traditional summer lull.

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