UK house prices almost stopped growing altogether in January as the annual growth rate fell to almost a six-year low, figures reveal today.
The 0.1 per cent growth rate was just a fifth of December’s own sluggish 0.5 per cent rate of annual growth, Nationwide’s data showed, and its worst since flat growth in February 2013.
However, month on month prices grew 0.3 per cent at the start of 2019 compared to a 0.7 per cent slip between November and December.
That left the average UK house price at £211,966.
Robert Gardner, Nationwide’s chief economist, said: “Annual house price growth almost ground to a complete halt in January.
“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.”
He blamed the UK’s uncertain economic outlook for the drop, given the backdrop of a record employment rate and strong wage growth.
“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,” Gardner added.
Andy Soloman, founder of estate agent adviser Yomdel, concurred, saying Brexit continues to weigh on the housing market as people wait to see how the UK’s exit unfolds.
“Unfortunately for the nation’s homeowners, the Brexit inspired ups and downs that have plagued the market over the last year seem to have remained as the UK continues in its struggle to leave,” he said.
“Going forward we should see a fairly muted performance in the short term, but mortgage rates remain low, wages are creeping up and employment growth is strong, and this will bring an air of stability and consistency if nothing else.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, called it a “sentiment-led deterioration” that mirrors a drop in consumer confidence back in November as the Prime Minister’s difficulties with gathering support for her withdrawal agreement became clear.
“Looking ahead, increasing numbers of prospective house-buyers likely will wait a few months for Brexit uncertainty to fade, forcing sellers to lower asking prices to attract braver buyers in the interim,” he added.
“As a result, year-over-year declines in house prices in the near-term should not be ruled out.”
Source: City AM