The chief economist at Nationwide says there are signs that the period of domination for London’s housing market - which for many years has outperformed the rest of the UK - is now drawing to a close.
“[In 2016] for the first year since 2008, annual house price growth in the capital was lower than the UK average, with prices increasing by 3.7 per cent over the year, down from 12.2 per cent in 2015” says Robert Gardner, who also compiles the Nationwide’s price index.
Figures from the mortgage lender put all-UK average house price growth in 2016 at 4.5 per cent the same rate as 2015.
“Like most forecasters, including the Bank of England, we expect the UK economy to slow modestly next year, which is likely to result in less robust labour market conditions and modestly slower house price growth” says Gardner of the year ahead.
“But we continue to think a small gain - around two per cent - is more likely than a decline over 2017 as a whole, since low interest rates are expected to help underpin demand while a shortage of homes on the market will continue to provide support for house prices” he says.
“Affordability has improved in Scotland, the North, East Midlands and Northern Ireland over the past 10 years. By contrast, in London 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” he adds.