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House prices: average London property prices fall £3,500 as rate of growth slows across all UK regions

The average UK house price is down by £8,500 from the peak of August 2022 (PA Wire)
The average UK house price is down by £8,500 from the peak of August 2022 (PA Wire)

Average house prices in London have fallen by 0.9 per cent over the past year, it was revealed today.

The slowdown may be due, in part, to the capital’s large proportion of flats, prices for which have “broadly stagnated”, said the report by Halifax.

London’s housing market has felt the squeeze following September’s mini-budget, which sparked a jump in mortgage rates. Bank of England base rate rises have also been putting an upward pressure on borrowing costs.

According to the Halifax, the average price of a property in London now stands at £526,842 after the 0.9 per cent fall in a year. Despite this, homes in the capital are still priced at £240,000 more than the average cost of a home across the UK. The average UK house price in February was £285,476.

“The reduction in housing market activity has been quite modest considering recent rises in mortgage rates and the cost-of-living shock, while a fresh crop of properties has buoyed viewings considerably and is outstripping sales agreed,” said north London estate agent and former RICS chairman Jeremy Leaf.

“As a result buyers are waiting to see if prices may soften further and mortgage repayments stabilise before committing.”

The UK figures

Annual house price growth stood at 2.1 per cent in February for the third month in a row, according to the Halifax data. The average UK house price in February was £285,476.

Looking at the monthly picture, UK property values increased by 1.1 per cent in February, accelerating from 0.2 per cent growth in the month to January.

House prices are down around £8,500 on the August 2022 peak but remain almost £9,000 above the average prices seen at the start of 2022 and are still above pre-pandemic levels

Kim Kinnaird, Halifax Mortgages

Kim Kinnaird, director, Halifax Mortgages, said: “Recent reductions in mortgage rates, improving consumer confidence, and a continuing resilience in the labour market are arguably helping to stabilise prices following the falls seen in November and December.

“Still, with the cost of a home down on a quarterly basis (by 2.5%), the underlying activity continues to indicate a general downward trend.

“In cash terms, house prices are down around £8,500 (2.9%) on the August 2022 peak but remain almost £9,000 above the average prices seen at the start of 2022 and are still above pre-pandemic levels, meaning most sellers will retain price gains made during the pandemic.

“With average house prices remaining high, housing affordability will continue to feel challenging for many buyers.”

Tom Bill, head of UK residential research at estate agent Knight Frank, said: “The UK housing market appears near the end of a long hangover from the mini-budget rather than on the verge of a price plunge.

“Activity stopped well before Christmas due to the mortgage market turmoil but has picked up this year as people come to terms with where rates are settling.”

Nathan Emerson, chief executive of estate agents’ body Propertymark, said: “Year on year, estate agents across the UK have seen a small drop in the number of sales being agreed whilst the number of new properties coming to market has remained the same.

“Increases to interest rates have caused buyers to rethink their budget and haggle on price, but the drive evidently still remains to see their purchase through and move home.”

There’s been a notable uptick in activity in 2023 and this has reversed the rot seen during the back end of last year

Marc von Grundherr, Benham and Reeves

Marc von Grundherr, director of estate agent Benham and Reeves, said: “While current house price performance may remain sluggish when compared to the meteoric rates of the pandemic market boom, there’s been a notable uptick in activity in 2023 and this has reversed the rot seen during the back end of last year.”

James Forrester, managing director of estate agent Barrows & Forrester, said: “The housing market continues to stand firm in 2023 and the general economic outlook is far more positive than anticipated.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Lenders continue to jockey for position, with a number increasing the pricing of their cheapest five-year fixes.

“However, even if there is another base rate rise this month, there is a growing expectation that rates are close to their peak, and if inflation also continues to fall, the outlook appears brighter for borrowers.”

House prices across the UK

Region

Average price

Annual price growth

East Midlands

£234,749

2.4%

Eastern England

£331,442

1.4%

London

£526,842

-0.9%

North East

£163,953

1.1%

North West

£221,306

3.7%

Northern Ireland

£185,009

5.7%

Scotland

£198,779

2.2%

South East

£387,205

1.7%

South West

£298,939

1.4%

Wales

£210,917

1.2%

West Midlands

£246,351

5.0%

Yorkshire and Humber

£200,634

3.6%

Source: Halifax