House prices in London fell in May at their sharpest annual rate since 2009 as a slowdown that began in the expensive central districts that took place around the capital.
Prices in London fell by 4.4 percent in the year to May 2019, an acceleration of the 1.7 percent decline for the year to April, according to the Office for National Statistics – the largest annual fall in house prices since August 2009 when they fell 7 percent.
The fall in house prices in London, combined with slower growth in the south and east of England, has lowered house price growth in the UK over the past three years. In the United Kingdom as a whole, house prices rose 1.2 percent in the year to May, compared to 1.5 percent in April.
Economists said that Brexit was a factor in the delay. Howard Archer, chief economic adviser at the EY Item Club, said: “There are indications that activity in the housing market may have been somewhat helped by avoiding a disruptive Brexit at the end of March, but the overall benefit seems limited.”
He added: “We believe that the Brexit will be delayed until October 31. . . and the domestic political situation in the UK is troubled, long-term uncertainty will depress the economy and hamper the housing market. “
Annual price declines have been delayed in the last two months in the most expensive central boroughs of London, such as Kensington and Chelsea, which have led the slowdown and where prices have already fallen sharply. But areas further from the center are now experiencing their own slump: in May in Lambeth, prices fell by 4.5 percent on an annual basis.
Richard Donnell, Director of Research and Insight at the Zoopla Real Estate Portal, said, “We expect the rate of annual fall in prices in London to moderate in 2019 and 2020.”
Price growth in Wales and Scotland was stronger than in England. House prices in Wales rose by 3 percent from 5.3 percent in April to May, while they rose by 2.8 percent in Scotland compared to 1.7 percent in April.
In England, house prices rose by 1 percent compared to 1.3 percent in the year until April. Growth was strongest in the northwest, with increases of 3.4% and in the West Midlands with increases of 2.7%.
The ONS also said that British inflation was unchanged in June, again the goal of the Bank of England, despite continued wage growth.
Prices were 2 percent higher than a year earlier, the same as in May, and were in line with the predictions of economists. Core inflation, excluding food, alcohol and energy, rose from 1.7 to 1.8 percent last month.
Constant inflation would give the bank little reason to consider interest rate cuts, economists said.
“There is little pressure for the MPC to adjust interest rates in both directions, while CPI inflation remains on track in June,” said Andrew Wishart, economist at Capital Economics.