London homeowners nurse £20,000 paper loss in year

THE Brexit deadlock helped to wipe more than £20,000 off the value of an average London property in a year as the wider housing market suffered its lowest price growth since 2013.

House prices in London plunged 4.4pc year on year to an average of £457,000 as the capital endured its sharpest slump in a decade.

Overall price growth in the UK pulled back to 1.2pc, the joint-lowest level in more than six years, as economic and political uncertainty hit. The average property price edged up to £229,000 in the year to May.

House price growth has been declining for the last three years and the slowdown in the property market has intensified since late last year as political uncertainty mounted. Early surveys suggest that prices have struggled to bounce back in June.

Howard Archer, chief economic adviser at EY Item Club, warned the boost to the housing market from the delay to the UK’S departure from the EU “will prove limited in both size and length”. A shortage of houses and the likelihood the Bank of England will keep interest rates close to ultra-low levels will support prices, he added.

The weakness in the capital has seeped out to the surrounding region but prices in the South East returned to growth after falling on the year for three consecutive months.

The North East was the only other region to see prices slip while the North West was the strongest in England as growth hit 3.4pc.

Samuel Tombs, of Pantheon Macroeconomics, believes that the downturn gripping London and the South East is unlikely to spread. The slump in London also “reflects the slowdown in net migration, a glut of new-build flats and valuations correcting from excessively stretched levels”, he said.