House prices in London have fallen on an annual basis for the first time since 2009, according to a closely-watched activity report.
The monthly house price study by Nationwide said that not since 2005 has the capital been the UK’s “worst-performing” region.
It was the only region to see an annual price decline in the third quarter, falling 0.6%.
Average growth in the UK remained steady at 2% – up 0.2% month-on-month.
Image: The average cost of a property is just above £210,000, Nationwide says
It left the average cost of a property just above £210,000, Nationwide said, with the East Midlands topping the price growth league for the first time since 2002 – rising at an annual rate of 5.1%.
Robert Gardner, Nationwide’s chief economist, said: “House price growth rates across the UK have converged in recent quarters.
“Annual growth rates in the south of England have moderated towards those prevailing in the rest of the country.”
Nationwide said that while price growth in the South has slowed, the gap in cash terms between southern and northern England remains “exceptionally high” at £171,000 – a figure which has doubled over the past decade.
Affordability and doubts over the economy have contributed to the price movements this year.
The report suggested prices in London were 55% above their pre-financial crisis peak compared to a national average of 14% and it was overdue a period of weaker growth.
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Mr Gardner predicted that any increase in interest rates – as the Bank of England signals a willingness to tackle rising inflation – would be likely to have a minimal impact on the market this year.
He explained: “This is partly because the proportion of borrowers directly impacted will be smaller than in the past.
“In recent years the vast majority of new mortgages have been extended on fixed interest rates.
“The share of outstanding mortgages on variable interest rates has fallen to its lowest level on record, at circa 40%, down from a peak of 70% in 2001.”