Annual house price growth slowed to its lowest rate in 16 months in March, with the brakes applied by London, which is no longer acting as a “workhorse” dragging up prices nationally, a report suggested.
Property prices across England and Wales were up 5.6% annually last month, according to property firm LSL, which uses data on completed sales from the Land Registry and mortgage lenders for its index. This is the lowest annual rise since November 2013, a follows a 6.5% yearly increase in February and a recent high of 11.2% in August 2014.
The report examined the “London effect” to determine what extent prices in the capital have been driving up overall national growth.
In March, annual growth excluding London was 4.9%, just 0.7% lower than the national figure when the capital was included - the smallest gap between the two in three years.
“For so long, London has been the workhorse dragging up overall measures of UK house price growth, but we’ve reached a new equilibrium,” said Adrian Gill, director of Reeds Rains and Your Move estate agents, which are part of the LSL network.
“While house price growth is more measured than it was a year ago, it’s also far more evenly distributed across the country, with London having the most negligible impact on barometers of house price growth for three years. The difference between annual growth, including and excluding the capital, is the smallest since March 2012, when the gap was 0.5%.”
Earlier this week, the Centre for Economics and Business Research (CEBR) said it expects UK house prices generally to rise by 1.5% this year, while values in London fall by 3.6% following “years of over-performance”, the first time since 2009 that prices nationwide have risen faster than in the capital.
However, it added that the predicted dip in London will not last for long, with property values expected to rise by 2.7% in the capital next year and 2.3% across the UK.
The LSL report also showed that, while completed house sales were up almost 12% in March compared to February, over the first quarter of the year they were down 5% compared with the same period last year.
“While house prices might still be on the up, sales appear to be treading water,” said Gill. “But this is far from a typical year. With the general election tightening its tempo every week up until 7 May, cautious buyers are holding back to wait and see which way the chips fall.”
On Thursday, a report from surveyors and estate agents suggested that UK house prices could start to rise again, driven by a second monthly fall in the number of homes coming on to the market.
Expectations of price rises were being driven by a shortage of stock for sale, said the Royal Institution of Chartered Surveyors (Rics), with March seeing the number of properties being put on to the market falling for the second month running.
