According to a new index from Nationwide, house prices in London have fallen for the fifth consecutive quarter.
The average price of a home in London is now £468,544, down 0.7 percent in the third quarter compared with the same period last year.
Robert Gardner, Nationwide’s chief economist, said: “When you look at the affordability measures, such as house prices versus earnings, they look quite stretched in London compared with other parts of the country.”
“Much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates.”
“Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low.”
Unlike London, areas including Yorkshire and Humberside saw a fast growth of 5.8 percent.
The average house prices in the third quarter of 2018 in Yorkshire and Humberside is £160,263.
The East Midlands also saw an impressive growth of 4.8 percent, where the average house costs £186,414.
Despite the fall in the capital, London remains the most expensive place to buy a property by a significant amount.
Gardner says he expects house prices to increase by one percent over 2018.
“Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates,” he said.
“Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low.”
Howard Archer, a chief economic adviser at the EY Item Club, said: “We suspect that the housing market will be relatively lacklustre over the coming months – although there are varying performances across regions with the overall national picture dragged down by the poor performance in London and parts of the South East.”