Annual price growth in UK falls to slowest pace for almost two years
Annual house price growth in the UK slowed to just 0.5% in 2018, down from 2.6% in 2017, the weakest pace since February 2017, according to the latest lender index to be published.
Month on month prices fell by 0.7% in December, taking the average price of a home to £212,281, the data from the Nationwide also shows.
A breakdown of the figures shows that the strongest growth in 2018 was in Northern Ireland with a rise of 5.8%, followed by Wales, up 4%. Prices in Scotland rose by 0.9% during the year and in England by 0.7%.
One of the more prominent regional trends in 2018 was the further narrowing of the North/South house price divide in England. Price growth in London, the South East, East Anglia, and the South West moderated throughout the year, while in the North West, the North East, the West Midlands, and Yorkshire and Humberside, price growth remained broadly stable in the 3% to 4% range.
Robert Gardner, Nationwide’s chief economist, said:
‘This trend was not entirely unexpected, however, as it followed several years of sustained outperformance by the South, especially London, which left affordability more stretched in these areas.’
He pointed out that even although house prices have been rising more quickly in the North of England since the second quarter of 2017, price levels are still significantly higher in the South. Indeed, the price of a typical home in the South of England at £329,240 is still almost double that in the North at £166,642.
He also pointed out that although annual house prices growth has slowed considerably this was not unexpected and at 0.5% is in line with our expectations a year ago that it would be around 1%.
‘Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchases, have remained broadly stable in recent months, but forward-looking indicators had suggested some softening was likely.
‘In particular, measures of consumer confidence weakened in December and surveyors reported a further fall in new buyer enquiries towards the end of the year. While the number of properties coming onto the market also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers.
‘It is likely that the recent slowdown is attributable to the impact of the uncertain economic outlook on buyer sentiment, given that it has occurred against a backdrop of solid employment growth, stronger wage growth and continued low borrowing costs.’
He believes that near term prospects will be heavily dependent on how quickly the uncertainty lifts, but ultimately the outlook for the housing market and house prices will be determined by the performance of the wider economy, especially the labour market.
‘The economic outlook is unusually uncertain. However, if the economy continues to grow at a modest pace, with the unemployment rate and borrowing costs remaining close to current levels, we would expect UK house prices to rise at a low single digit pace in 2019.’
Kindly shared by Property Wire