Average house price growth across the UK hit its lowest annual rate in five years, according to figures released by the Office for National Statistics.
The average price of a property increased in June at a rate of 3%, compared to the previous month’s figure of 3.5%. The last time the rate was this low was August 2013, according to the ONS.
The fall in prices was mostly due to the continuously sluggish London market, as other regional centres such as Edinburgh and Manchester exhibited growth. Elsewhere, Aberdeen and Cambridge were the only two cities out of the 20 major UK centres that showed an actual fall in house prices, most notably the 5.7% fall in the former (thought to be related to a fall in crude oil prices). Regionally, the south-east and north-east both suffered falls, with the rest of the country’s general regions all returning average growth. Prices in the north-east decreased by 0.6%. Mike Hardie, ONS head of inflation, said: “The housing market across the UK again slowed with London house prices seeing their largest annual fall since September 2009 in the aftermath of the economic downturn.”
Across London, house prices have fallen in over 40% of the capital’s boroughs, including in the centre, where they have dropped by up to 4% in recent years, the average shrinkage in the capital being around 0.7%. However, an average property in London is worth £491,200, more than twice as much as in Edinburgh (£225,300), three times more than in Manchester (£163,300), and over four times more than in Liverpool (£118,800). In Central London, average property prices are over £1 million. The average price in England remains nearly £100,000 more than in Wales and Scotland, and over that for Northern Ireland, with £245,000 compared to £127,271 in the latter.
Analysts expect slowing prices in London and a growing market elsewhere to further narrow the gap between the capital and the rest of the UK in the next few years. Richard Donnell, insight director at Property Analytics firm Hometrack, said: “We expect house prices to keep rising across regional cities such as Birmingham, Manchester and Edinburgh over the next two to three years. During this time house price growth in London will remain flat, with annual price rises of approximately 0-2%. As a result, the gap between house prices in cities outside of the south-east and house prices in London will continue to contract.”
Shaun Church, director of London-based mortgage broker Private Finance, noted that a correction in the housing market was no bad thing: “Years of steady house price hikes have created huge affordability issues for first-time buyers, so the fact that annual house price growth has fallen to its lowest point in five years will be a welcome change for many. The trend has been reversed completely in the capital, and with negative price growth also in the North East, it could be that other regions will see a more relaxed pace of house prices rising in the coming months.”