Buying a home: London's falling house prices drive down UK autumn average

National wage growth is now almost double asking price rises, reveals latest figures.
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Lizzie Rivera18 September 2017

House prices rose this month in every region of the UK except London, according to figures released today.

The capital saw a 3.2 per cent annual price drop, bringing asking prices to an average of £611,000 the latest House Price Index from Rightmove found.

The price drop was primarily driven by the softening market in London's most expensive, or prime, boroughs, while prices continued to rise in the city's most 'affordable' boroughs.

Hackney and Southwark, two of the cheapest boroughs in central London, saw price growth of 9.5 per cent to £660,000 and 7.2 per cent to and £630,000, respectively — the highest in the capital.

While by no means cheap, house prices in these two areas are at least £140,000 less than those in neighbouring Islington and around a third lower than asking prices in other central London areas, including Camden and Westminster.

“One of the few ways that Londoners can fight back against constantly stretched affordability is to seek out the most affordable housing. Their focus on this unfortunately pushes up demand and consequently fuels upwards price pressure," says Rightmove director and housing market analyst Miles Shipside.

The capital's cheapest borough, east London's Barking and Dagenham, where the average house is listed for just over £312,000 saw the average asking price rise by 5.2 per cent.

This is the only borough where house price growth is in line with the national average.

ENGLAND & WALES

Prices across England and Wales were up slightly compared to a year ago, rising 1.1 per cent to £310,000.

Meanwhile wage growth was 2.1 per cent, almost double house price inflation, the report highlighted.

"The longer any meaningful differential is maintained then the greater the improvement in buyer affordability," said Shipside.

"Having finally turned the tables to potentially improve their buying power, buyers will now be hoping that it is not eroded again by an interest rate rise or rampant consumer price inflation.”

The biggest annual increases of 5.5 per cent have been seen in the East Midlands, where average asking prices are £208,000, followed by the West Midlands where rises of 4.4 per cent have seen average prices rise to £217,000.