House prices across Britain have seen a modest increase over the past year, with the average property value rising by 1.7% to £327,800 in April. However, London remains an outlier, experiencing a decline in values despite still being the most expensive region in the country.

Overall Market Trends

The latest e.surv House Price Index reveals a steady but subdued housing market. Prices increased by 0.2% over the month and 0.3% over the quarter, indicating ongoing support for property values without strong momentum. The most significant annual growth has been recorded in lower-priced regions, suggesting affordability continues to influence market dynamics.

Scotland led the growth with a 4.4% rise, bringing average prices to £228,300. Other regions such as the North West and Yorkshire and the Humber also posted healthy annual increases of 3.7% and 3.2% respectively.

Regional Variations in Price Growth

Wales experienced a 3% annual increase, while the East Midlands and West Midlands saw rises of 2.8% and 2.7%. The South of England showed more modest gains, with the South West up 1.4%, the East of England 1%, and the South East 0.4%. London was the only region to record a decline, with average house prices falling by 3.6% year on year to £586,871.

The capital also saw a slight quarterly decrease of 0.1%, highlighting ongoing challenges in its housing market.

London’s Diverging Market

Within London, the decline in prices is more pronounced in inner areas, where values dropped 8.7% year on year. Outer London saw a smaller fall of 2.6%. The average price in inner London stands at £687,415, compared to £518,655 in outer London, maintaining a significant price gap of nearly £169,000.

Flats in inner London have been particularly affected, with prices 11.2% below their April 2020 levels. In contrast, outer London flats remain 4.1% above their April 2020 peak, despite recent weakening.

Factors Influencing Price Movements

Several factors are contributing to the contrasting trends seen in London compared to the rest of Britain. Higher mortgage rates have reduced buying power, especially in the capital’s more expensive markets, impacting first-time buyers and investors reliant on mortgages.

Additionally, increased service charges and running costs have made some flats less attractive compared to houses or lower-density properties. Tax changes have also played a role, with the end of the Help to Buy scheme removing a key source of demand for new-build flats.

Inner London continues to face an oversupply of apartment stock, further weighing on prices in that sector.

What this means for landlords

For landlords, these trends suggest a cautious approach to investment, particularly in London’s inner areas where values are falling and flats face greater challenges. The modest growth in other regions may offer more stable opportunities, especially in lower-priced markets where affordability supports demand.

Understanding regional variations and the impact of mortgage costs and tax changes will be essential for managing portfolios effectively. Landlords should also consider the implications of rising service charges on tenant demand and property attractiveness.

Source: Based on reporting from Property118

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