House prices across England are rising at a faster pace than in London, according to the latest ONS and Land Registry figures.
Traditionally, house prices have risen at a significantly faster pace in London than in the rest of Britain. However, 2016 ended with the average UK house price rising by 7.7 per cent to £236,000, compared to 7.5 per cent in London.
Despite slightly lower growth, the average cost of buying a home in London is still more than double the nationwide average, at £483,000.
London's top-performing boroughs
“The rate of property price growth has been softening, with the capital underperforming the national average for the first time since the financial crisis of 2008," says Rob Weaver, Property Partner's director of investments.
“While prime central London has hit something of a wall, outer London boroughs are still recording double-digit price growth."
Eight of London's 33 boroughs have had price growth of more than 10 per cent in the past 12 months, with the biggest increases in the capital's most affordable borough, Barking and Dagenham. Annual growth of 14.1 per cent has taken average prices to £289,000 in this east London regeneration zone.
Unsurprisingly, the other areas recording the strongest growth are also some of the most affordable, including the neighbouring east and south-east London boroughs of Havering, Bexley and Newham, where prices average around £350,000.
This highlights the main issue of London's housing crisis - a lack of affordable homes - as underlined in the Government's Housing White Paper, released last week.
“While good news for existing homeowners, this further rise in property prices – at four times the rate of consumer price inflation and more than double average earnings growth – will take home ownership even further out of reach for Generation Rent," warns Richard Snook, senior economist at PwC.
House price forecast for 2017
Since 1996, the main driver of property price growth has been the shortage of suitable homes being built to meet the demands of a growing population. Now, modest pay increases are not keeping up with the rising cost of living, making it extremely difficult for first-time buyers to get on to the property ladder.
"If it becomes impossible to buy, sellers will also take a hit on the price of their home due to a drop in demand," says Rightmove director Miles Shipside.
Snook adds: “The good news for prospective buyers is that we do expect a gradual slowdown in house price inflation in 2017, with our scenarios ranging from between two and six per cent growth."