House prices in UK shift to lower gear
The pace of house price growth has slowed dramatically in London in the past year, highlighting a change of gear in the UK property market.
Official figures show that only the North East and Scotland saw smaller house price rises than London over the past 12 months.
House prices rose 1.5% in London in the year to the end of March, the Office for National Statistics (ONS) said.
A year ago, prices were going up by nearly 15% year-on-year in the capital.
That was still slower than the peak in April 2000, when annual house price growth in London was 28.3%.
The recent slowdown in house prices will be cheered by potential first-time buyers, who have seen property values rise at a much faster rate than interest on savings.
The shift is not just in London. In March, house prices were lower in every nation and region of the UK compared with the previous month except for Wales (up 1.4%) and the West Midlands (up 0.3%).
Across the UK as a whole, the ONS said house prices were down 0.6% compared with February, meaning the average home cost £215,848. This typical property value has remained relatively static for 10 months.
In the year to the end of March, house prices were up 4.1% on average across the UK.
The value of semi-detached homes were rising at the fastest rate (up 5.3%), with the prices of flats rising slowest (up 3.5%).
"It is now abundantly clear that the housing market is in its softest patch for several years," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics, pointing to early indications of a significant fall in prices of new-builds.
"Looking ahead, it is very hard to see growth in central London prices recovering, given that valuations look stretched, the financial sector is facing an uncertain post-Brexit future and volatility in sterling is undermining property's safe-haven appeal for overseas investors.
"Across the rest of the UK, house price growth looks set to remain dampened by sluggish growth in wages and the loan-to-income limits imposed on lenders."
Sarah Beeny, owner of estate agent Tepilo, said: "Homeowners should not worry about a crash as the chronic shortage of properties available - the main reason sales transactions are down - will ensure prices remain buoyant."
Separate figures from the ONS showed that rental prices paid by private tenants in Britain rose by 1.8% in the year to April. down from 2% in the year to March. London private rental prices grew by 1.4% over the same period.