Average house prices in the UK increased by 1.7% in the year to January 2019, down from 2.2% in December 2018, which, according to the Office for National Statistics (ONS), is the lowest annual rate since June 2013, when it was 1.5%.

In its latest UK House Price Index, the ONS revealed that the UK has seen a significant slowdown in house price growth over the last two and a half years, primarily driven by a slowdown in the South and East of England.

The lowest annual growth was in London, where prices fell by 1.6% over the year to January 2019, down from a decrease of 0.7% in December 2018. Following behind was the East of England, where prices dropped by 0.2% over the period.

Despite London seeing the lowest annual growth rate, the English capital remained the most expensive place to purchase a property, with an average price of £472,000, followed by the South East and the East of England, at £321,000 and £288,000 respectively.

The average UK house price was £228,000 in January 2019, just £4,000 more than the same period a year ago.

However, when analysing the figures on a non-seasonally adjusted basis, average house prices in the UK decreased by 0.8% between December 2018 and January 2019, compared with a decrease of 0.3% in average prices during the same period a year earlier.

On a seasonally adjusted basis, average house prices in the UK fell by 0.2% between December 2018 and January 2019.

When breaking the UK down, the average house price in England was £245,000, a rise of 1.5% over the 12-month period, down from 1.9% in December 2018. Though, house prices in Scotland grew at a slower rate than the other countries in the UK, increasing by 1.3% in the year, down from 2% in the year to December 2018, with the average property price standing at £149,000.

Wales experience the strongest house price growth in the year, rising by 4.6%, with the average house price being £160,000. The ONS credited this strong level of growth to the abolition of the Severn Bridge tolls, which has resulted in strong house price growth in South East Wales particularly.

In the year to Q4 2018, house prices in Northern Ireland increased by 5.5%, taking the average house price to £137,000, the lowest of the four countries.

Commenting on the figures, Foundation Home Loans marketing director Jeff Knight: “The Office for Budget Responsibility has already downwardly revised its forecasts for the year and we are no closer to knowing what will happen on March 29. The lowest annual rate of growth since 2013 is also a pretty clear marker.

“When it comes to buying behaviour, hesitation is certainly taking over. The flip side is that interest rates remain low and Hammond’s Spring Statement introduction of extra funding for affordable homes is designed to address the supply and demand shortfall. However, we shouldn’t let Brexit take all the blame; the fact is that lack of supply will continue to inflate prices beyond the reach of first time buyers and we shouldn’t lose sight of this.”

Landbay CEO and co-founder John Goodall echoed Knight’s comment regarding a lack of supply, highlighting that “problems with affordability and supply remain”.

“First time buyers may have taken a little respite from The Chancellor's Spring Statement, but affordability remains a key concern. When you also factor in poor saving rates and relatively weak wage growth, saving towards a deposit on a home of their own is near impossible. That is why we need to shine a light on investment in house building, ensuring it is strategic in solving the affordability problem,” he said.

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