London house prices suffer largest drop in nine years

House prices in the UK have risen slowly in the past 12 months. There is a divergent picture across the country, with prices in London and the south east struggling, but other regions growing quickly. - iStockphoto

House prices in London fell 0.7pc in the 12 months to June - the largest annual fall in the city’s house prices since September 2009.

Three of London’s central boroughs had double-digit drops in prices as the reversal in the capital's fortunes continued. The City of London fell 23.8pc, Kensington and Chelsea dropped 13.9pc and the City of Westminster slid 12.1pc, according to data from the Office for National Statistics and the Land Registry.

Despite sharp falls in some of its boroughs, London remained the most expensive place to buy a property in June, with the average home costing £477,000, more than twice the UK average of £228,000.

Across the UK, prices increased on average by 3pc in the 12 months, the slowest rate of growth since August 2013. This continues a trend of weak growth in the market, which has grown at around 5pc or under since the start of 2017.

Some of the most expensive areas in the south of England also saw prices fall.

In South Buckinghamshire, where the average property costs £590,814, prices fell by 4.9pc over the year. Prices in Oxford and Cambridge dropped 2.2pc and 0.1pc respectively.

Prices also fell in the north-east, the cheapest region in the UK to buy a house, where the average home costs £127,000.

Semi-detached houses rose 4.4pc over the year, whereas flats and maisonettes climbed by just 0.5pc. Weaker growth in flats and maisonettes is partly due to decreases in prices in London, which accounts for 25pc of transactions on these types of homes in the UK.

The growth in rental prices remained weak too, rising 0.9pc in Britain in the year to July. This was led by London and the south-east; prices in the capital decreased by 0.3pc over the period. Excluding London, rents increased 1.5pc.

Paul Smith, chief executive of Haart estate agents, said: “Middle England is thriving – prices in areas of Birmingham, Nottingham and Leicester rose by a huge 10pc on the year, and families across the UK looking for a semi-detached home are having to pay almost £10,000 more than they were the same time last year.

“There remains an imbalance between supply and demand, making now a good time to sell.

“However, some areas of the market are suffering. Government policy on buy-to-let is clearly having a detrimental effect.

“Landlords are exiting the market in their thousands and as a result rental prices are soaring.”