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In June, Nationwide reported a 4.3pc year-on-year decline for London house prices, while the surrounding Outer Metropolitan region saw a 2.9pc fall.
Jamie Lennox, director of brokerage Dimora Mortgages, said the ONS data may not reflect “what is going on in the trenches within the housing market”, meaning worse could be to come.
He added: “With the average purchase transaction taking 3-4 months, these purchases will have originally been agreed when mortgage pricing was on a downward trend.
“With the rate jumping dramatically since then we are likely to see less favourable results in the run-up to the end of 2023.”
Inflation proved stubborn in July, with the consumer prices index rising by 6.8pc in the year to July.
While the drop was in line with the Bank of England’s prediction of 6.8pc, economists had expected a sharper fall to 6.7pc.
Samuel Mather-Holgate, of financial advice firm Mather and Murray, said with regular depressing economic data hitting the headlines it is no surprise that house prices are stagnant.
He added: “The capital, with the highest house prices in the UK, has been hardest hit and there will be more pain to come as recent interest rate increases haven’t taken effect in these figures.
“With inflation falling significantly today it’s possible the central bank might pivot on rates towards the end of the year, but there will have been a deep correction of up to 20pc in prices if they delay further than that.”
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