London house prices fall 3.8 per cent in third quarter in ‘subdued’ market
The cost of a home in London has fallen annually by 3.8 per cent in the three months to September, narrowing from a 4.3 per cent fall in the previous quarter, as the housing market shows signs of remaining fairly subdued despite cooling inflation.
According to Nationwide’s latest report on the market, house prices were unchanged over the month, but remained down 5.3 per cent year-on-year at around £14,500.
London was the best performing region in the south of England, and houses in the capital remain the most expensive out of any UK area at £514,000.
The South-West, which includes Bristol and Cornwall, saw annual house prices fall the most in the third quarter, down 6.3 per cent.
Nationwide said that housing market activity remains weak, with just 45,400 mortgages approved for house purchase in August, 30 per cent below the monthly average in 2019 before the pandemic struck.
Robert Gardner, Nationwide’s chief economist, said: “This relatively subdued picture is not surprising given the more challenging picture for housing affordability.
“For example, someone earning an average income and purchasing the typical first-time buyer home with a 20 per cent deposit would spend 38 per cent of their take home pay on their monthly mortgage payment – well above the long-run average of 29 per cent.”
While rates are coming down – buyers are still struggling with affordability as they also navigate rising living costs and wage stagnation.
Gardener said that investors have “marked down” their expectations for the future path of Bank Rate in recent months amid signs that “underlying inflation pressures in the UK economy are finally easing, and with labour market conditions softening”.
He added: “This in turn has put downward pressure on longer term interest rates which underpin fixed rate mortgage pricing If sustained, this will ease some of the pressure on those remortgaging or looking to buy a home.”