London house prices:pace of growth falls behind national average with annual rise of two per cent tipped for 2017

While the pace of London's house price growth slowed to below the national average, modest rises of two per cent are tipped for the year ahead.

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While house prices across the UK have remained stable this year, the pace of growth in London has fallen behind the national average for the first time since 2008.

Prices in the capital rose by an annual rate of 3.7 per cent over the year, compared to a UK average of 4.5 per cent, according to the Nationwide Building Society.

Yet the average cost of buying a property in London remains more than double the national average of £205,937. The index shows home buyers in the capital face average prices of £473,073, with further, albeit modest, growth forecasted for next year.

“Looking ahead to 2017, house price prospects will depend crucially on developments in the wider economy, around which there is a greater degree of uncertainty than usual," says Robert Gardner, Nationwide's Chief Economist.

“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."

Property values in the capital's outer boroughs are continuing to outperform many central London districts as buyers search for more affordable homes close to the capital's huge regeneration zones and emerging Crossrail hubs.

With average property prices of about £335,000, Bexley in south-east London is one of the most affordable boroughs in which to buy. Prices have soared by nearly 17 per cent this year thanks to new Crossrail links at Abbey Wood station from 2018.

Meanwhile, four out of 10 homes are sold to first-time buyers in the east London borough of Barking and Dagenham, where the average property sells for £288,000. The Barking Riverside regeneration project is set to transform the area within the next 15 years.

In central London, the areas traditionally popular with second steppers and families are tipped to remain stable in the year ahead.

“As the London market is expected to be slower in 2017, established markets such as Clapham, Balham and Wandsworth should remain solid," says Rob Weaver, Director of Investments at property crowdfunding platform Property Partner.

"They’re good transitional areas for people moving out of the capital for more space to Surrey and especially Guildford."

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