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London house prices down for first time since 2009, according to Nationwide

House prices in London were down 0.6% over the past year. Credit: PA

House prices in London have fallen for the first time in eight years, according to lenders.

In the biggest sign of a slowdown since 2009, London recorded a 0.6% year-on-year fall this month, Nationwide said.

Prices across Britain overall rose at their slowest pace in more than four years - the East Midlands performing the strongest since this time last year.

London's downturn meant it was the weakest-performing region for the first time since 2005, figures published on Friday showed.

Tightening household incomes, partly caused by rising inflation and slow wage growth, have been cited as driving factors.

Tightening household budgets was cited as a reason for the downturn. Credit: PA

Across the UK as a whole in September, annual house price growth remained steady at 2%.

But any increase in interest rates from its record low of 0.25% could dampen future market prospects.

Robert Gardner, Nationwide's chief economist, said: "House price growth rates across the UK have converged in recent quarters.

"Annual growth rates in the south of England have moderated towards those prevailing in the rest of the country.

"London has seen a particularly marked slowdown, with prices falling in annual terms for the first time in eight years, albeit by a modest 0.6%."

Speaking of interest rates, Mr Gardner said: "Providing the economy does not weaken further, the impact of a small rise in interest rates on UK households is likely to be modest.

"This is partly because the proportion of borrowers directly impacted will be smaller than in the past. In recent years the vast majority of new mortgages have been extended on fixed interest rates."

Jeremy Leaf, a north London estate agent, said buyers and sellers were still nervous about prospects for the market.