House Prices in London Decline Amid Brexit Uncertainties

For the fifth quarter in a row, house prices in London fell annually, though the decline remains modest at just 0.7 per cent amid Brexit uncertainties.

Indeed, prices in the capital are only three per cent below the all-time-high recorded in the first quarter of 2017 and are still more than 50 per cent above their 2007 levels, said Nationwide in a report released for the month ended September.

The average price of a home in London declined by 0.7 per cent in the third quarter, compared with the same period of 2017, to £468,544, according to Nationwide. It followed a 1.9 per cent fall in house prices in the second quarter.

On a monthly basis, house prices in the UK moved up 0.3 per cent in September, to an average of £214,922, following the steepest monthly decline in six years in August.

The outer metropolitan region also saw a slight year-on-year fall, with prices down 0.3 per cent in the third quarter. The weakest performing region was the North, where prices were down 1.7 per cent year on year.

Yorkshire and Humberside was the strongest performing region in England, and also the UK, with prices up 5.8 per cent year on year. The East Midlands continued to see relatively strong growth, with prices up 4.8 per cent year-on-year.

Northern Ireland saw a pick up in annual price growth to 4.3 per cent and was the best performing amongst the home nations. Wales saw a slight softening in growth, with prices up 3.3 per cent year on year. Price growth also slowed in Scotland, from 3.1 per cent in the second quarter to 2.1 per cent.

“England was again the weakest performing nation, with prices up 1.4 per cent year-on-year.”

“Overall, UK house price growth remained broadly stable, but regional house price developments were more varied,” the report added.

Meanwhile, UK annual house price growth was steady at two per cent in September, the report said. The prices were up by 0.3 per cent during the month, after taking account of seasonal factors.

“Indeed, annual house price growth has been confined to a fairly narrow range of 2-3 per cent over the past 12 months, suggesting little change in the balance between demand and supply in the market,” said Robert Gardner, Nationwide's Chief Economist commenting on the figures.

“Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates,” he added.

Subdued economic activity and ongoing pressure on household budgets are likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low.

“Overall, we continue to expect house prices to rise by around one per cent over the course of 2018,” Gardner said.