London house prices fell month on month in October, making the capital the only region in the UK to report a decline.
Prices in the city fell 0.9 per cent compared with September, compared with a 0.3 per cent increase across the UK, according to the Office for National Statistics. House prices increased 0.9 per cent or more in the north-east of England, West Midlands and Scotland.
Lawrence Bowles, director of research at the real estate company Savills, said the decline in London could be explained by the capital being far more reliant on mortgage debt than the rest of the country, with average loan-to-income ratios and total mortgage costs far higher.
“Affordability constraints are the number one reason why London’s house prices are underperforming the UK in the latest data,” he said, adding: “That means London house prices are more sensitive to changes in interest rates than elsewhere in the UK.”
Mortgage rates have surged in the past few months, reflecting expectations of higher medium-term borrowing costs, as the Bank of England tries to tackle high inflation.
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Separate data from mortgage provider Nationwide showed that the average mortgage payment rose to 56 per cent of earnings in the third quarter in London, up from a recent low of 48 per cent in the first quarter of 2020, and well above the national average of 34 per cent.
ONS data showed that in Lewisham, a London borough that ranks among those with the largest share of mortgage buyers, according to real estate consultancy Knight Frank, house prices fell 1.5 per cent from September to October.