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House prices stabilising as London growth slows, says Nationwide

UK annual house price growth ended 2016 at 4.5 per cent, the same as the level of growth for 2015, the latest Nationwide house price index has found.

However, price growth in London was found to have ended the year below the UK average for the first time in eight years.

All regions saw house price growth in 2016, with East Anglia topping the table for the first time since 2010, with average prices up 10.1 per cent year-on-year.

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London saw a further moderation in the annual rate of price growth to 3.7 per cent in the fourth quarter, compared with growth of 7.1 per cent in Q3. This is the first time since 2010 that London has not ended the year as the strongest performing region, and the first year since 2008 that it has been below the UK average, according to the report.

The North was the weakest performing region, with prices little changed over the year.

Nationwide chief economist Robert Gardner said “the story of UK house price growth in 2016 was one of relative stability,” adding that there were signs that London’s significant period of out-performance “may be drawing to a close.”

Looking to 2017, he says: “House price prospects will depend crucially on developments in the wider economy, around which there is a greater degree of uncertainty than usual.

“Like most forecasters, including the Bank of England, we expect the UK economy to slow modestly next year, which is likely to result in  less robust labour market conditions and modestly slower house price growth.

“But we continue to think a small gain – around 2 per cent – is more likely than a decline over 2017 as a whole, since low interest rates are expected to help underpin demand while a shortage of homes on the market will continue to provide support for house prices.”

On a monthly basis, house prices grew by 0.8 per cent between November and December this year.

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