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House price growth in London to drop to six per cent this year

Helen Cahill
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London's high-end boroughs have been hit hard by tax changes (Source: Getty)

House price inflation in UK cities is set to slow to 8.2 per cent - and annual growth in London is predicted to fall to six per cent by the end of this year.

According to Hometrack, house price growth has slowed in cities across the south of England especially, due to the weaker demand for homes after the Brexit vote and the introduction of a higher rate of stamp duty.

Read more: House prices under threat in Tower Hamlets due to rapid building and Brexit

In London, house prices have increased by 0.9 per cent over the last three months.

The lowest year-on-year growth has been in London's most expensive boroughs, such as Kensington & Chelsea (0.2 per cent), Hammersmith and Fulham (1.0 per cent), and Westminster (1.8 per cent).

Cambridge had the fastest slowdown in growth, with price rises falling from an annual rate of 16 per cent in March 2016 to just six per cent today. Hometrack said this was to do with the city becoming unaffordable.

Read more: House prices rebounded this month, hitting first-time buyers

Richard Donnell, insight director at Hometrack, said: "On current trends house price growth in London will be running at around six per cent per annum by December and on course for low single digit growth by spring 2017. Record unaffordability, tax changes impacting investor demand and high stamp duty costs are all combining to reduce market activity in the face of rising supply.

"Despite the overall slowdown in London, it is dangerous to view the capital as a single housing market. While many of the central boroughs have seen low rates of growth, in parts of outer London where house prices are 30 per cent lower than the London average, such as Barking and Dagenham and Havering, prices are rising by more than 15 per cent although these areas are starting to slow."

House prices after Brexit: a short history

  1. In June, RICS predicted house prices would drop for the first time since 2012
  2. Rightmove report house prices fell by 0.2 per cent in June
  3. Brexit vote, everyone wants to know what will happen to house prices, so we asked the experts
  4. FTSE 100-listed housebuilder shares take a tumble
  5. Data from Halifax shows house prices fell after the Brexit vote
  6. Mortgage approvals fell to an 18-month low in July
  7. Nationwide reports house prices went up again in August

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