The number of home buyers in London fell to the lowest level for four years, fresh figures from the Council of Mortgage Lenders (CML) show.
Purchasers in the capital borrowed £24.5bn to buy property in the final quarter of last year, down 0.4% on 2015, and took out 75,800 loans, down 7% year-on-year.
The growing supply-demand imbalance was highlighted by the CML as the main cause for the decline in transactions.
The amount borrowed by first-time buyers in the capital rose by 3% to £11.9bn, but home movers borrowed 3% less than in 2015, at £12.5bn.
Paul Smee, CML director general, commented: “The number of home buyers in London fell to a four year low in 2016. Home mover activity in particular continues a downward trend, with the fewest loans since 1991.
“Persisting supply and affordability issues appear to be exerting an ongoing restraint on growth, meaning there is some uncertainty around how the market will perform going into 2017.”
But while the new number of new mortgages fell, remortgage activity continued to grow, with the total hitting £16.5bn, up 21% on 2015.
“By contrast, there has been resurgence in remortgage activity. Competitive mortgage rates aided by low interest rates have sparked remortgage levels not seen in the capital since 2008,” said Smee.