Prices in the capital region have now been on a downward slide for 31 months and, during this time, the mix-adjusted average home price has fallen 6.3%.
The effect of the downturn in both the South East and East of England on the national average has been dramatic, taking the annualised growth from 'just about keeping pace with inflation' to 'seriously sub-inflation' during the course of 2018. In fact, when compared to Retail Price Index (ex-housing) growth in England and Wales, house price growth has been negative in real terms for 22 months.
The South West looks like the next region to slip into the red. Prices have fallen in five out of the last six months and the current annual growth is a mere 0.7%. Similarly, we expect the East and West Midlands markets to cool off during 2019 and consequential price erosion to follow. Nothing catastrophic, nor a consequence of Brexit, merely a natural post-boom rebalancing of supply and demand.
A far cry from the doom and gloom in the South and East, 2018 has been a good year for the North, West and Wales. Inflation-beating price growth is still evident in Yorkshire (4.7%), the North West (4.8%) and the West Midlands (5.2%) as their respective regional property markets continue to thrive. Wales remains the leader of house price growth, with annualised gains amounting to a whopping 7.4%. For the time being, marketing times are still falling rapidly and we expect that this late-cycle boom will roll on through 2019. Overall, supply of property for sale in the UK is up by 3% and the total stock has increased by 10.8% year-on-year.
In December 2017, the annualised rate of increase of home prices was 2.6%; the same measure today is just 0.8% and continues to trend towards the negative.
