London Home-Price Growth Slows to Three-Year Low as Demand Ebbs

(Bloomberg) -- London house prices rose at their slowest annual pace in more than three years in October.

Home values in the capital dropped 1.2 percent from September, taking the annual gain to 7.7 percent from 9.2 percent in September, the Office for National Statistics said in a release in London on Tuesday. That’s the slowest year-on-year increase since June 2013. Nationally, annual price growth eased to 6.9 percent from 7 percent.

A recent report from Rightmove showed London property prices were having their worst December in six years, led by weakness in prime areas in the city that is likely persist into 2017. The U.K.’s decision to leave the European Union has pushed down the pound, boosting inflation, and increased uncertainty about the employment outlook. That may undermine Britons’ finances and home demand next year.

“The fundamentals for house buyers look certain to deteriorate over the coming months with consumers’ purchasing power weakening markedly and the labor market likely softening,” said Howard Archer, an economist at IHS Markit in London. “House prices will come under increasing pressure as 2017 progresses and will likely be essentially flat over the year. Indeed, we would not rule out a marginal drop.”

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