House price growth in London shrank 0.8 per cent in the 12 months to July, according to latest government figures, with the average price of a home in the capital reaching £534k during the month.
While London prices increased between June and July 2023, they increased by a larger amount between the same months last year.
The ONS said: “London’s average house prices remain the most expensive of any region in the UK, with an average price of £534k in July 2023 and an annual inflation rate of negative 0.8 per cent in the 12 months to July 2023.”
The average UK house price was £290k in July 2023, which was £2,000 higher than 12 months ago, but £2,000 below the recent peak in November 2022, the Office for National Statistics said.
Average UK house prices increased by just 0.6 per cent in the 12 months to July 2023, down from a revised 1.9 per cent in June 2023.
The capital’s housing market has been battered in recent months by surging mortgage rates and weak buyer sentiment.
More current reports from the likes of Halifax and Rightmove show that the price of a home in London has been further hindered in the last month.
However, signs of rebound have surfaced in recent months with the average five-year fixed mortgage now at 5.67 per cent, the seventh consecutive week of five-year fixed rates dropping, after peaking at 6.11 per cent in July, Rightmove said in its most recent report.
In the first week of September the number of new properties coming to market also jumped by 12 per cent when compared with the average weekly number throughout August.
A better than expected inflation reading of 6.7 per cent may also ease market worries.
“While the market backdrop remains challenging, slightly cooling ONS inflation figures and a growing consensus that the Bank of England has neared the top of its base rate increases has brought some needed respite,” said Jean Jameson, chief sales officer at Foxtons.
“Properties with more competitive pricing are still stimulating buyer demand and, for Foxtons, deals agreed in July were the highest they have been over the past 5 years.
“This indicates that London property remains an attractive option for many and that buyers and sellers are opting for established real estate agencies to support with transactions in this market.”