Property values in London continue to fall dragging down UK house prices to the lowest annual growth levels in five years.

The latest data from the Office of National Statistics (ONS) shows London has recorded the lowest growth of -1.7% and average property values of £473,609.

Falling house prices in the capital is dragging down the rest of the country and in particular flats and maisonettes as London accounts for around 30% of this property type in England.

The reduction in prices for flats and maisonettes is good news for first time buyers as they require a lower deposit or smaller mortgage to get on the property ladder.

Slowest growth for five years

The UK property market is growing at a slower rate with house prices up 2.7% in the year to October and the lowest annual growth for the UK since July 2013, when house prices increased by 2.3%.

The following table from the ONS shows average house prices and annual change for homeowners to October 2018.

Region	Average price	Annual change
North West	£165,007	4.9%
Northern Ireland	£135,060	4.8%
Scotland	£151,508	4.4%
Yorks and the Humber	£163,858	4.4%
East Midlands	£191,993	4.3%
Wales	£160,874	3.8%
West Midlands	£196,073	3.8%
England	£247,914	2.4%
South West	£256,167	2.1%
East of England	£294,548	2.1%
South East	£326,785	1.5%
North East	£128,484	-0.1%
London	£473,609	-1.7%

Over the month house price growth was highest in Northern Ireland up 2.3%, North West rising 1.2% and Yorks and the Humber higher by 1.0%.

In comparison, average UK house prices are £231,095 with house price change for the month down at -0.2%.

There is less competition from buy-to-let investors driving prices higher after changes to stamp duty and taxation allowance on mortgage interest make it less attractive to buy.

For home movers trading up the gap between their current home and the next needs a much larger deposit and they may struggle to find a suitable property with low supply in the market.

As average house prices in many regions continue to rise, remortgage buyers have an opportunity to release capital which they can use to improve their home.

Low supply of new homes

The supply of new homes in the UK remains very close to an all-time low according to The Royal Institution of Chartered Surveyors (Rics).

Weaker house prices were due to affordability pressures, political uncertainty and a lack of fresh stock on the market.

Much of the weakness is from London and the South East where there is a negative assessment on the prospects for house prices in the next year.

For more expensive properties of £1 million and over, three quarters of Rics respondents reported sales prices were below asking prices and 14% said below this by more than 10%.

Properties listed at up to £500,000 in value, half of respondents reported sales prices were at least level with the asking price although 34% said prices were 5% below.

Rather than downsize, the lack new homes could mean equity release mortgage buyers stay in their home and access this wealth for home and garden improvements or even buy a more expensive home.

What are your next steps?

Call our LCM mortgage brokers if you are a buy-to-let landlord with a property, remortgaging and want the best mortgage deal, buying your first home or you are planning to move home.

For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your home to spend on anything such as repay an interest only mortgage or improve your quality of life.

Learn more by using the mortgage cost calculators, property value tracker chart and equity release mortgage calculator. Start with a free mortgage quote or call us and we can take your details.