House price growth in the UK beat expectations in June, but prices in the capital fell month-on-month.
Figures by the Land Registry showed prices in the UK rose 4.9 per cent in the year to June, or 0.8 per cent between May and June, while the average house price hit £223,257.
However, in the capital prices fell 0.7 per cent between May and June - the only region to experience a month-on-month fall.
Prices in London rose 2.9 per cent in the year to June, the joint second-lowest regional rise after the North East, where house prices rose 2.5 per cent.
The figures also showed muted sales volumes across England: sales rose just 1.6 per cent between April 2016 and April 2017.
“After the previous month’s data showed a decline in London’s house prices, it’s concerning but not surprising to see a further - and more pronounced - fall in the capital’s prices in June," said Jonathan Hopper, managing director at Garrington Property Finders.
“For years, London’s property market seemed to know no bounds, but for two consecutive months the capital has seen a deceleration in prices, forcing sellers to adjust their pricing in keeping with a new reality.
"There is a degree of inevitability about prices cooling, as house price inflation in the capital raced ahead of wage inflation for several years, but ultimately this situation was always going to be unsustainable."
Figures published yesterday by Your Move suggested there is worse to come, with house prices in England and Wales dipping 0.2 per cent between June and July.
Prices in London fell 1.5 per cent in June, it suggested, saving almost £9,000 off the average property price.