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Average UK house price rises above London's for the first time since 2008

Wednesday 4th January 2017

For the first time in eight years, house prices in the capital grew slower than the national average in 2016.
 
The findings, revealed by high-street mortgage lender Nationwide, showed that average prices in London rose by 3.7% last year. By contrast, the average increase across the country as a whole was 4.5%. It is the first time since the global financial crisis hit that the UK has outperformed London on house price growth. 
 
Unsurprisingly, London still remained the most expensive place to buy a home in 2016. In Q4 2016 the average price of a property in London was £473,073, compared to a national average of £205,937.
 
Robert Gardner, Nationwide's chief economist, said that 2016 had been a stable year for the housing market despite the various challenges it faced. Annual price growth was identical to 2015, but the rate is likely to slow in 2017.
 
“House price prospects will depend crucially on developments in the wider economy, around which there is a greater degree of uncertainty than usual,” Gardner commented.
 
“Like most forecasters, including the Bank of England, we expect the UK economy to slow modestly next year, which is likely to result in less robust labour market conditions and modestly slower house price growth.”
 
The building society expects prices to rise by around 2% this year, with a shortage of supply and low interest rates driving demand for mortgages both contributing towards this. With housing supply still way behind demand, upward pressure on house prices is inevitable, although growth is unlikely to be as strong as previous years. 
 
In 2016, house price growth was seen across all regions of the UK, with the biggest rise seen in East Anglia (up by 10.1%). In the northern regions, though, prices rose by just 0.1%, once again highlighting the stark differences that exist between north and south when it comes to house prices.
              

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