Property values went up by 4.5% in 2016 – and for the first time since 2008 the rate of house price growth in London has ended the year below the national average.
The average UK house price stood at £205,898 in December, marking a 0.8% month-on-month increase, the building society said.
The 4.5% annual increase in house prices across the UK recorded in December was the same as the uplift recorded in December 2015, indicating that the last year has seen “relative stability” in the market, its report said.
Looking across the UK, East Anglia has seen the strongest house price growth over the last year, with a 10.1% annual increase taking average property values there to £218,544.
In London, house prices have grown by 3.7% over the year, reaching £473,073 on average. Regions where annual house price growth is now growing at a faster annual rate than London include the South West of England at 4.4%, the West Midlands at 4.1%, and Yorkshire and Humberside at 4%.
Robert Gardner, Nationwide’s chief economist, said: “There were signs that London’s significant period of outperformance may be drawing to a close.
“For the first year since 2008, annual house price growth in the capital was lower than the UK average, with prices increasing by 3.7% over the year, down from 12.2% in 2015.
“The South of England as a whole continued to see slightly stronger price growth than the North of England, though the differential narrowed.
“Price growth in Wales, Scotland and Northern Ireland remained subdued, though each saw small gains overall in 2016.”
House prices in Scotland have increased by 2.2% annually to reach £142,895 on average. Property values in Wales have lifted by 2.4% annually, taking the average price there to £146,049. House prices in Northern Ireland have edged up by 0.7% over the last year, taking the typical value there to £129,385.
Nationwide said the gap between house prices in northern and southern England has widened by around £11,500 over the last year alone – and now stands at over £170,000.
The average house price in northern England and the Midlands is £156,211, while the average house price in southern England is £326,554.
Mr Gardner has said he expects UK house prices generally to see a further small increase across 2017, of around 2%, as low interest rates help to support home buyer demand, despite expectations that the economy will slow next year.
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: “The real test for the market will come in the early new year when we see whether continuing low mortgage rates and lack of new and existing housing supply prove more relevant than uncertainty over unemployment, inflation and the wider economy post-Brexit.”
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