Will 2017 be the year London’s property market comes into line with the national picture? The latest figures from Nationwide found 2016 was the first year since 2008 that growth in the capital was lower than the UK average, falling to 3.7% over 12 months from 12.2% in 2015.
The building society’s chief economist Robert Gardner said: “The story of UK house price growth in 2016 was one of relative stability. Annual house price growth ended 2016 at 4.5%, the same as the rate recorded in 2015.
“There were signs that London’s significant period of outperformance may be drawing to a close. There has been a marked divergence in house price growth across the UK in recent years, which has translated into a significant difference in affordability across the regions.
“The differences are striking. In Scotland and the North Of England, a typical buyer would lie in the 30th income percentile, while in the South West they would be at the 75th percentile and above the 90th percentile in London.
“In the capital and the South Of England more people have found themselves priced out of the market or had to borrow a greater multiple of their income, though low interest rates have helped reduce monthly mortgage costs.”
In line with a lack of affordability in the capital, Nationwide’s figures show this is the first time in seven years of its index that London hasn’t finished the year as the strongest performing region.
The building society said it expected a 2% growth in prices nationally as the economy was set to slow due to uncertainty over Brexit during 2017 with low interest rates and a shortage of homes continuing to prop up the market.
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