The latest data and analysis on UK house prices from the Office for National Statistics has revealed that, in the year to December 2018, average house prices in the UK increased by 2.5% - a fall from the 2.7% recorded in November 2018.
According to ONS, this is the lowest annual rate since July 2013 when it was 2.3%. Over the past two years, there has been a slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England.
The data revealed that the lowest annual growth was in the North East, where prices fell by 1.0% over the year to December 2018, down from an increase of 1.7% in November 2018. This was followed by London where prices fell 0.6% over the year.
Average UK house prices during December 2018 stood at £231,000 - a rise of £6,000 when compared to December 2017. 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% in average prices during the same period a year earlier (November 2017 and December 2017). On a seasonally adjusted basis, average house prices in the UK increased by 0.2% between November 2018 and December 2018.
The West Midlands shows the strongest annual house price growth in England
At an English regional level, the West Midlands showed the highest annual house price growth, with prices increasing by 5.2% in the year to December 2018. This was followed by the East Midlands and Yorkshire and The Humber (both increasing by 4.2%). The English region with the slowest annual house price growth was the North East, where prices fell by 1.0% over the year
As ever, the property industry was quick to react. Here's what they're saying:
Jeff Knight, Marketing Director for Foundation Home Loans, commented: “With Britain’s imminent EU departure seemingly looming, the vast majority of would be buyers have opted to observe market activity from the side-lines rather than participate in active opportunities. 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.”
Dilpreet Bhagrath, Mortgage Expert at Trussle, 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.
For the slightly more cautious first-time buyers, opting for fixed rate mortgage deals might be favourable, giving complete clarity over how much your mortgage costs each month so that you can plan ahead.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: "This reduction in growth is not entirely surprising given that the figures reflect what was happening in November and December when Brexit turmoil was even more frenzied than it is now. But what has happened since on the high street is that we have seen the release of some pent-up activity and even investors and developers taking a more optimistic view than they have done for some time.
The market continues to be underpinned by a shortage of available property and very low interest rates. However, in order to successfully transact, realistic sellers need to make their properties compelling in terms of price, presentation, or both, in order to engage with fewer but more pragmatic purchasers.
If the chances of a deal with our European partners improve, we expect to see more balance between supply and demand and a firming up of prices without necessarily seeing a significant boost in them.'
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "December’s figures confirm a slowdown in house price growth which is not really surprising given the time of year and ongoing Brexit shenanigans. The national average figure masks significant regional differences with prices falling in the North East and London, whereas Northern Ireland and Wales experienced relatively strong house price growth.
With London property prices falling every month for the second half of last year, prices clearly need to correct, which is encouraging both for first-time buyers and second steppers trying to make a move up the housing ladder. However, let’s not get carried away as London remain the most expensive part of the country to purchase property so any price reductions should be placed in that context.
Lenders remain keen to lend, with rates extremely competitive. Not all lenders can compete to offer the lowest rate with some easing criteria instead, which is making lending more accessible for certain groups, such as older borrowers or the self-employed with just one year’s accounts. With Brexit uncertainty unlikely to lift anytime soon, interest rates don’t seem to be going anywhere either for the time being at least."
Alastair McKee, Managing Director of One77 Mortgages, had this to say: “A rather predictable and anticlimactic end to an erratic year where UK house price growth is concerned and the lowest rate of growth in over five and a half years will probably come as less of a shock than it may have six to 12 months.
Of course, this muted activity will have been heightened by the seasonal wind-down, however, it demonstrates the detrimental impact our current political limbo is having on consumer sentiment on both sides of the buyer-seller fence.
But credit where it’s due, the market has certainly put up a fight and weathered all that has been thrown at it to at least finish within broad expectations at 2.5% annual growth. There are also other positives to take, with transaction levels exceeding that of last year and we’ve certainly noticed an uplift in buyer enquiries early on in 2019 which bodes well for the year ahead."