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London house prices keep falling while South East goes into reverse

The Telegraph logo The Telegraph 17/04/2019 Sophie Smith
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House prices in London have suffered further falls, while the market in the South East of England has gone into reverse for the first time since 2011, according to official figures.

The capital posted a 3.8pc decline for the year to February – steeper than the 2.2pc drop for the 12 months to January and the biggest drop for almost a decade – while prices fell by 1.8pc in the South East.

Those declines offset stronger growth in other parts of the UK: prices in the North West and the West Midlands rose by 4pc and 2.9pc respectively.

Nationally house prices rose by just 0.6pc in the year to February – sharply lower than the 1.7pc growth recorded in January and the lowest annual rate since September 2012 when it was 0.4pc, the Office for National Statistics found.

Howard Archer, chief economic adviser at EY ITEM Club, said buyers remained cautious amid heightened Brexit and economic uncertainties, but noted there were significant variations across regions.

He added: "We suspect house prices will rise only 1pc over the year and would not be at all surprised if they stagnate. Consumers may well be particularly cautious about committing to buying a house, especially as house prices are relatively expensive relative to incomes. Also it looks questionable whether the labour market and earnings growth will sustain their recent improvement."

John Goodall, chief executive of peer-to-peer lending site Landbay, said: "While issues with affordability and supply remain, political and economic uncertainty linked to Brexit is more acute than ever. The reality is we could have a combination of a new prime minister, a general election, a Labour government, or a second EU referendum in the coming months."

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The average house price in Britain was £226,000 in February, according to the ONS – £1,000 higher than the same period a year ago. Average house prices peaked at £232,000 in August 2018. 

While London property prices are falling, the capital remains the most expensive place to buy with an average of £460,000. At the other end of the scale the North East has the lowest average house price at just £125,000.

Last month, the Royal Institution of Chartered Surveyors blamed the continuing "Brexit impasse" on the fall in buyer demand across all parts of the UK, which has caused the number of agreed sales to drop. 

However, the trade body also reported "more optimism" about a modest improvement in activity over the next 12 months, with 15pc more respondents than in February anticipating house prices would rise over the next year, the strongest reading since August.

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Joshua Elash, director of property lender MT Finance, warned that unless the Government "wakes up and begins to think about encouraging and supporting a market intentionally subdued by regulatory and tax changes, and further dampened by Brexit uncertainty, [the situation] only going to get worse".

Separate data from UK Finance showed that despite Brexit uncertainty causing many buyers to adopt a "wait-and-see" approach, the number of new first-time buyer mortgages completed in February rose 4.1pc year-on-year. 

While the number of people moving home was at the same level as this time last year, it was the fifth consecutive month of annual growth in first-time buyers. 

Gallery: 15 of the worst mistakes made by first-time homebuyers (Espresso)

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