Annual house price growth fell to 7.6 per cent in November, its lowest level for more than three years.
The figures from Hometrack show how tax changes and the Brexit vote have been weighing on London property. In November 2015, house price growth was 11.8 per cent year-on-year.
However, in large regional cities, which are still affordable, house price growth has been improving.
In Manchester, house price growth was 5.3 per cent at this time last year. Now, house price growth is 7.1 per cent. The average house price in Manchester is now £148,300, however, as compared to an average of £483,300 in the capital.
Overall, Hometrack has forecast house prices to grow by four per cent over 2017.
House price growth has plummeted in Cambridge. Growth has dropped from 13.3 per cent last year to 2.4 per cent this year, the biggest fall in growth out of all of the cities analysed by Hometrack.
Transaction volumes have dropped off significantly in London, and are projected to fall by 6.7 per cent by the end of the year. In Cambridge, Hometrack said transactions will be down by 8.8 per cent by the end of the year.
Richard Donnell, insight director at Hometrack, said: "In London and southern cities, homeowners are facing the greatest affordability pressures, while the buoyant investor market has been impacted by fiscal changes, as well as tougher underwriting standards for mortgage borrowers."