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London house prices register first annual fall since 2009
London property prices have registered their first year-on-year fall since 2009 when the economy was in recession after the financial crisis.
House prices in London dropped 1% in the year to February - the first year-on-year decline since September 2009 when prices were down 3.2% from a year earlier, the Office for National Statistics reported.
February's figure for London was a sharp turnaround from January when prices rose at an annual rate of 1.3%. The ONS said London's growth rate had been slowing since the middle of 2016.
Price changes varied widely across London boroughs. The largest fall was in Tower Hamlets, which registered a 7.9% drop, while the biggest gainer was Redbridge with an 8.9% increase.
Across the UK house prices rose at an annual rate of 4.4% in February, down from 4.7% growth in January and lower than expectations for a 4.7% increase in the year to February. The average price of a UK property was £225,047. The fastest growth was in the West Midlands where prices rose 7.3% and the slowest growth outside London was in Yorkshire and the Humber where the annual rate was 3.1%.
Prices rose 4.1% in England, 4.7% in Wales and 6.2% in Scotland in the year to February. In Northern Ireland prices rose 4.3% in the final quarter of 2017 from a year earlier.
The official figures reflect earlier reports about the state of the UK property market. In February Foxtons, the London-focused estate agent, blamed economic uncertainty and higher stamp duty for expensive homes for sales volumes falling to near-record lows. The Royal Institution of Chartered Surveyors has reported wide variations as the London market has virtually seized up while other regions maintained solid activity.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the figures showed Chancellor Philip Hammond's decision to reduce stamp duty for first-time buyers had failed to boost activity or prices.
"Further increases in mortgage rates over the coming months likely will have a greater impact on prices in London than in the rest of the UK, given that loan-to-income ratios are much higher in the capital," Tombs said.