Annual average Greater London house prices have risen 3.1%, but that is slower growth than in other regions, according to Halifax.
Halifax said UK prices in May stood at £261,743, up 9.5% from a year earlier and 1.3% above April.
The mortgage lender added that annual house price inflation is now at its strongest level in nearly seven years.
Halifax’s managing director Russell Galley said the South of England, traditionally the driving force of national house price performance, “is for once lagging somewhat behind the rest of the country”.
He said: “This is especially the case in Greater London, where average prices are still 3.1% higher than a year ago but growing more slowly than the rest of the country. This likely reflects a weakness in city prices given the shift in preference for properties with more space, whilst recent surcharges on stamp duty for non-UK residents and Brexit concerns will also have weighed on the capital’s market.”
Prices in Greater London in May stood at £509,621.
However, Galley also pointed out that prices in the capital were already extremely expensive, having experienced a boom following the global financial crisis.
The housing market was initially hit by the pandemic in March 2020 when firms had to close estate agent branches and viewings were off the cards for the lockdown. But restrictions eased two months later.
Since then the industry has benefited from people reassessing their housing needs during lockdowns, with a number of estate agents reporting higher demand for home office space and larger outdoors areas.
Meanwhile, in March’s Budget a extension to a stamp duty holiday deadline was given, and the government said a new mortgage guarantee scheme would launch to help people with a 5% deposit get on the property ladder.