House prices slump to lowest annual rate since August 2013

Average house prices in the UK have increased by 3% in the year to May 2018, a decrease from the 3.5% figure reported in April, the lowest annual rate experienced since August 2013, according to the latest statistics from the Office for National Statistics (ONS) published in its UK House Price Index: May 2018.

The annual growth rate has continued to slow since the middle of 2016 and has remained under 5%, with the exception of October 2017, throughout 2017 and into 2018.

The report revealed that the drop in UK house price growth is primarily driven by a slowdown in the South and East of England. The lowest annual growth was in London, where prices have actually decreased by 0.4% over the course of the year. May was the fourth consecutive month that house prices in London had fallen in 2018.

During May, the average UK house price was £226,000 which is just £6,000 higher than in May 2017 and remains unchanged compared to last month. Looking at the figures from a seasonally adjusted basis, average house prices in the UK fell by 0.2% in April 2018 and May 2018, compared with an increase of 0.4% in average prices during the same period in 2017.

Across the UK, all property types demonstrated an increase in average price in May when compared to May 2017. Detached houses saw the biggest increase, rising by 4.6% in the year to May 2018 and the average price being £344,000. The average price of flats and maisonettes remained unchanged in the year to April 2018 at £203,000, the lowest annual growth of all property types. The report found that weaker growth in UK flats and maisonettes was driven by negative annual growth in London, which accounts for approximately 25% of all UK flats and maisonette transactions.

The main contributor to the increase in UK house prices was the rise in the average cost of a house in England, which grew by 2.9% over the year to May, with the average price being £244,000. Wales experienced house price growth of 1% with property prices standing at £149,000 and, in Scotland, the average price increased by a huge 4.9% resulting in the average property costing the same as it would in Wales. The average price in Northern Ireland currently stands at £130,000, another large increase of 4.2% over the year to quarter 1 2018.

Commenting on the findings, Trussle CEO and founder Ishaan Malhi said: “House prices are rising at a slower pace than they have been over the past few decades. While we’re beginning to see property prices stabilise, purchasing a first home still feels like a huge leap for many.

“Schemes such as the Help to Buy ISA can help first-time buyers save a higher amount, but more needs to be done to help people get onto the property ladder during uncertain times. With the appointment of yet another new Housing Minister, confidence in the housing market is low. We need to encourage widespread innovation and stable leadership to achieve the nation’s dreams of owning their own homes.”

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