London house prices hit record high but signs of a slowdown still on the horizon

The London property market is slowing but still shows “surprising momentum” despite a barrage of interest rate hikes according to latest figures from lender Nationwide.

The building society said the average price of a home in the capital rose at an annual rate of six per cent in the second quarter of the year to stand at a record £540,399.

Nationally prices are rising at 10.7 per cent, a slight easing from 11.2 per cent in May. London was the slowest growing region.

Nationwide’s chief economist Robert Gardner, said: “There are tentative signs of a slowdown, with the number of mortgages ap-proved for house purchases falling back towards pre-pandemic levels in April and surveyors reporting some softening in new buyer enquiries. Nevertheless, the housing market has retained a surprising amount of momentum given the mounting pressure on household budgets from high inflation, which has already driven consumer confidence to a record low.

“Part of the resilience is likely to reflect the current strength of the labour market, where the number of job vacancies has exceeded the number of unemployed people in recent months. Furthermore, the unemployment rate remains close to 50-year lows. At the same time, the stock of homes on the market has remained low, which has helped to keep upward pressure on house prices.”

Director of Benham and Reeves, Marc von Grundherr, commented: “We’re yet to see any notable decline in the rate of house price growth across the UK market and, despite a serious strain on household finances causing consumer confidence to plummet, these stronger economic headwinds are yet to blow the house down.

“London remains the jewel in the crown where outright property values are concerned and even though the capital has seen the lowest rate of growth of all UK regions, a six per cent jump is still considerable when you consider the pounds and pence return that homeowners have enjoyed over the last year.”

But Guy Harrington, chief executive of specialist bridging loans company, Glenhawk, said: “Another month of slowing growth is just a precursor to the sharp correction about to torpedo the UK housing market, caused by a perfect storm of record inflation, geo-political turmoil, rising rates and a once-in-a-generation cost of living crisis.”