The Nationwide Building Society has announced that the average UK house price at the end of 2016, had increased by 4.5 per cent – the same as 2015.

Robert Gardner, Nationwide’s Chief Economist said: “There were signs that London’s significant period of outperformance may be drawing to a close. For the first year since 2008, annual house price growth in the capital was lower than the UK average, with prices increasing by 3.7 per cent over the year, down from 12.2 per cent in 2015. The south of England as a whole continued to see slightly stronger price growth than the north of England, though the differential narrowed.”

In the fourth quarter of 2016, the average house price in the South West was £228, 611, a change of 4.4 per cent in that quarter. The average property price in London is now £473,073. On the subject of affordability, Robert Gardner continues: “Affordability has improved in Scotland, the north, east Midlands and norther Ireland over the last ten years. By contrast, in London and the south of England more people have found themselves priced out of the market or have had to borrow greater multiples of their income, though low interest rates have helped reduce monthly mortgage costs.

“As you might expect, there is a strong relationship between affordability in a region and how much first time buyers borrow. As affordability becomes more stretched, the more first time buyers borrow relative to their income.”

Nationwide calculated that a first time buyer with a 20 per cent deposit in London, would need to borrow around 6.5x their income, and would, unsurprisingly need to be on the 90th percentile of wage earners. In the south west, with the third highest house prices (after the south east), first time buyers would need to borrow 6x their income and would sit on the 75th percentile for earning power.

However, house prices remain buoyant, despite affordability issues and political uncertainty. Robert Gardner continues: “Looking ahead to 2017, 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 two 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.”