London’s property market has slowed dramatically with prices rising at their slowest rate for nearly five years, according to latest official figures.
The average cost of a home in the capital rose just 3.7 per cent to £474,704 in the year to February and actually slipped slightly in January, the latest data from the Land Registry reveals.
In four boroughs prices are now falling year on year and double digit growth – the norm for much of London last year – is now confined to Havering and Kensington & Chelsea.
The biggest falls were in Tower Hamlets, where they dropped 2.9 per cent in a year, Brent, where they fell 2.3 per cent, Islington with a 1.9 per cent fall and Hammersmith & Fulham, which dipped 0.2 per cent.
The data suggests that the slowdown that started in the most expensive central areas following sharp increases in stamp duty is now finally spreading out to the suburbs.
Unusually prices in London are now rising less rapidly than the rest of England, where the average rise was 6.3 per cent.
Russell Quirk, founder and chief executive of online agents, said: “Although many have been quick to attribute a slowdown in the market to fears of Article 50 and buyer uncertainty, the latest data from the Land Registry would suggest a more natural adjustment is currently happening to the market.
“Prices across the board have generally continued an upward trend despite a slower start to the year than usual, but it is no coincidence that both London and the South East have seen some of the only falls in monthly property price growth.
“Both have considerably higher average house prices than the rest of the UK and what we are currently seeing is the property market in these areas realigning itself with the rest of the country, having seen an abnormal level of inflation over the last year.”
However, the number of sales remains depressed with just 6,665 in December down almost a third on the 9,700 recorded in the same month in 2015.
The number of properties going on the market – already at historically low levels – slumped after the Referendum in June.
The Land Registry figures came as Government data showed that the official rate of inflation remained unchanged at 2.3 per cent last month, raising hopes that the acceleration in price rises that followed the Brexit vote may not be as bad as feared.
But Jane Tully, director of external affairs at the Money Advice Trust, the charity that runs National Debtline, said that even this level of inflation could be enough to hurt many overstretched families
She said: “Many people will struggle to cope with this small but significant erosion, and our concern remains for a minority who are at risk of tipping over into problem debt as a result.
“Coupled with high levels of household borrowing, this trend comes at a worrying time and will require a joined up and sustained approach from the advice sector, lenders and government to ensure that those in need receive the support that can help them get back on track with their finances.”
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