Annual house price growth almost ground to a complete halt in January, with prices just 0.1% higher than the same time last year, Nationwide’s House Price Index has found.
This follows a subdued December when price growth slowed to 0.5%. There was a modest 0.3% increase month-on-month after taking account of seasonal factors.
Robert Gardner, Nationwide’s chief economist, said: “Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, 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 2018.
“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 in recent months. Uncertainty exerting a drag on the market.”
Gardner added: “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.
“Near term prospects will be heavily dependent on how quickly this 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 remains 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.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, thought these figures confirmed a market struggling to weather the Brexit storm but not collapsing.
He added: “The fall in December has been replaced by a modest rise in January but this is probably just as much to do with shortage of stock as release of some inevitable pent-up demand in the post-Christmas period.
“Looking ahead, there are probably too many potential bumps on the road to give a clear steer as to the future direction of prices and activity but what is apparent is that there remains a determination among a good number of serious buyers and sellers to find a way of moving on.”
Similarly, Mark Harris, chief executive of mortgage broker SPF Private Clients, said that uncertainty is the main issue affecting the housing market with potential buyers and sellers sitting on their hands and waiting to see what happens with Brexit.
He said: “However, lenders won’t be put off. They have started this year the way they finished the last one – keen to lend and offering some competitive products to encourage borrowers to take the plunge. Those who are in the market for a new mortgage or remortgage will find plenty of attractive deals, with many lenders cutting rates in the past couple of weeks or tweaking criteria.
“We expect pricing to remain low in the coming weeks as lenders compete for somewhat limited business in very uncertain times.”
Source: Mortgage Introducer