Annual house price growth in the UK slows to lowest since July 2013

Average house prices in the UK increased by 2.5% in the year to December 2018, down from 2.7% in November 2018, the lowest annual rate of growth since July 2013 when it was 2.3%, official figures show.

The data published by the Office for National Statistics using data from separate indices in Scotland, England, Wales and Northern Ireland, also shows that over the past two years there has been a slowdown in national house price growth, driven mainly by a slowdown in the South and East of England.

House price growth was strongest in Northern Ireland where prices increased by 5.5% over the year and it remains the cheapest part of the UK to buy a property with an average house price at £137,000.

In Wales, house prices increased by 5.2% over the last 12 months to reach £162,000. This was driven by strong house price growth in South East of Wales which the report says is likely linked to the abolition of the Severn Bridge tolls.

The average house price in Scotland fell slightly on the month to £149,000, an increase of 2.4% over the year to December 2018.

House prices in England grew at a slower rate, increasing by 2.3% in the year to December 2018, down from 2.5% in the year to November 2018, with the average house price in England now £248,000.

The lowest annual growth was in the North East of England where prices fell by 1% over the year to December 2018, down from an increase of 1.7% in November 2018. This was followed by London where prices fell 0.6% over the year.

At an English regional level, the West Midlands showed the highest annual house price growth, with prices increasing by 5.2% in the year to December 2018, followed by the East Midlands and Yorkshire and the Humber, both increasing by 4.2%.

The English region with the slowest annual house price growth was the North East, where prices fell by 1% over the year, followed by London where prices fell by 0.6%, unchanged from November 2018.

While London house prices are falling over the year, the area remains the most expensive place to purchase a property at an average of £474,000, followed by the South East and the East of England, at £325,000 and £290,000 respectively.

The North East continues to have the lowest average house price at £129,000 and is the only English region yet to surpass its pre-economic downturn peak

Mark Dyason, managing director of specialist property broker Thistle Finance, pointed out that the property market continues to slow down but the picture is being skewed by London and the South East.

‘There are many areas in the UK where the property market is not far off normal. Regions that have experienced slow but steady growth over the past decade are now proving much more resilient in the face of Brexit,’ he said.

It is important to realise just how much the housing market is linked to the economy, according to Jonathan Hopper, managing director of Garrington Property Finders. ‘The national property market’s slowing is in line with the UK’s broader economic slowdown,’ he said.

‘Yet there’s an irony here many of the fundamentals that typically drive property prices are surprisingly favourable. More Britons are in work than ever, wages are rising at a decent clip and consumer inflation is falling, meaning interest rates are likely to stay at their current rock bottom levels for some time to come,’ he explained.

‘And yet the confidence sapping uncertainty of Brexit and Britain’s political turmoil have stripped the market of momentum. Buyers may have fewer properties to choose from, but the lack of competition is enabling them to drive hard bargains and secure substantial discounts. Barring a surprise Brexit resolution between now and March 29th, the slow, buyers’ market is set to continue,’ he added.

But Mike Scott, chief property analyst at online estate agent Yopa, does not believe that the market will see a crash. ‘We do not expect that this will lead to widespread price falls, as long as the economic fundamentals remain strong, but we do expect a further slowdown as this official measure catches up with other reports, especially in the South and East of England,’ he said.

‘The overall annual rate of house price growth is likely to fall to around 1%, well behind growth in earnings which is now running at 3.4% per year, leading to improved affordability,’ he added.

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