Average house price growth drops to lowest annual rate since 2013

Average house prices in the UK increased by 2.5% in the year to December 2018, down from 2.7% in November 2017, and the lowest annual rate since July 2013 when it was 2.3%, the latest figures from the Office for National Statistics (ONS) has revealed.

Over the past two years, there has been a significant slowdown in UK house price growth, which the ONS said has been driven by a slowdown in the South and East of England.

The data highlighted that the lowest annual growth was in the North East, where prices fell by 1% over the year to December 2018, dropping from a 1.7% increase in November 2017. Following behind the North East was London, where prices dropped by 0.6% over the year.

While London house prices were falling over the year, the capital remained the most expensive location to purchase a property, with an average price of £474,000, followed by the South East and East at £325,000 and £290,000 respectively.

The average UK house price in December was £231,000, just £6,000 higher than in December 2017. When looking at the prices on a non-seasonally adjusted basis, average house prices in the UK increased by 0.2% between November 2018 and December 2018, compared with an increase of 0.4% a year earlier.

House price growth was strongest in Northern Ireland where prices increased by 5.5% over the year to quarter 4 (Oct to Dec) 2018. Despite the growth, Northern Ireland remains the cheapest UK country to purchase a property in, with the average house price at £137,000.

Similarly, house price growth in Wales was strong, with house prices increasing by 5.2% over the last 12 months to reach £162,000. This was driven by strong house price growth in south east Wales, likely linked to the abolition of the Severn Bridge tolls, according to the ONS.

Average house prices in Scotland fell slightly in December, dropping to £149,000, an increase of 2.4% in the year.

However, house prices in England grew at a slower rate than other countries of the UK, 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.

Commenting on the data, Trussle mortgage expert Dilpreet Bhagrath said: “Even with the slight increase in prices, it’s clear that Brexit nerves and uncertainty is still affecting the market. Not to mention the ongoing lack of supply, with more risk-adverse sellers staying put until the economic picture becomes clearer.

“That said, for new buyers, the current low interest rate climate coupled with the government’s commitment and extension of the help-to-buy scheme will offer further support for those hoping to get a foot on the ladder.”

Foundation Home Loans marketing director Jeff Knight echoed Bhagrath’s point in relation to Brexit uncertainty, adding that the “vast majority of would be buyers” have opted to “observe market activity from the side-lines”.

“That said, regional price growth continues to be robust and reflects significant investment, particularly compared to London where political uncertainty is taking its toll. On the buy-to-let side, remortgage activity will continue as landlords come off fixed rates and/or look to raise capital. I expect this to be more prevalent amongst portfolio landlords,” he stated.

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