The latest Hometrack cities index suggests that London house prices in the last quarter recorded the lowest growth for 20 months - just as the rest of the country appears to be shrugging off any impact on housing confidence from Brexit.
Hometrack says average house price growth in London over the three months to the end of September totalled 0.9 per cent. This is the lowest quarterly growth rate since January 2015 when fears of a potential housing bubble, a tightening of mortgage credit and concerns over the introduction of a mansion taxed gripped the market.
Today, it claims stretched affordability levels and stamp duty are impacting demand while supply continues to grow.
The overall headline rate of inflation for the 20 major UK cities monitored by Hometrack has remained steady with the annual rate of growth last month hitting 8.5 per cent, compared to 5.7 per cent 12 months ago.
This 20-city figure is higher than the overall UK picture where house prices are rising at 7.2 per cent year-on-year.
Despite the ongoing uncertainty surrounding the terms of Britain’s exit from the European Union, house price inflation continues to run more than three times faster than the growth in earnings. Hometrack claims this is down to improved household confidence, earnings rising ahead of inflation and low mortgage rates making housing affordable for those with equity.
Eleven of the 20 cities that form part of the Index have seen house prices continue to accelerate over 2016, typically large regional cities outside the south east - Manchester, Liverpool, Birmingham and Cardiff. In these markets affordability remains attractive and prices are rising off a low base.
However, the remaining nine cities are registering house price growth that is lower than it was at the start of 2016 with the greatest reduction seen in Cambridge, Oxford, London and Aberdeen.
This pattern is re-enforced by an analysis of property listings and sales data which shows that in large northern cities where prices are rising, market activity remains strong.
In contrast, London has the weakest market conditions with the new supply of homes coming to the market growing faster than sales, which have fallen back in recent months on weaker demand.
The ratio of sales to new supply in London is at its highest level for three years, re-enforcing the outlook for a continued slowdown in the rate of house price growth across London in the months ahead.