House prices increased at their slowest annual pace in nearly six years in January as property values tumbled in London but increased relatively strongly in places including the Midlands, Wales and Northern Ireland, official figures show.
England and Scotland saw a slowdown in annual house price growth, while in Wales and Northern Ireland property values are rising relatively strongly.
In Wales, the abolition of the Severn crossing tolls is helping to drive prices up in the south-east of the country, according to the report released jointly by the Office for National Statistics (ONS), Land Registry and other bodies.
Average house prices in the UK increased by 1.7% in the year to January 2019, down from 2.2% in December and the lowest annual rate since June 2013 when it was 1.5%, the report said.
UK house price growth has been slowing for the past two-and-a-half years, driven mainly by a slowdown in the South and East of England.
In London, house prices fell by 1.6% annually, while in the East of England prices fell by 0.2% over the year.
In the East Midlands, prices increased by 4.4% in the year to January 2019, while the West Midlands saw 4.0% growth.
Across the UK, the average house price was £228,000 in January.
ONS head of inflation Mike Hardie said: “While average UK house prices increased over the year, the rate is down from last month, and is at its lowest in almost six years.
“London property prices continued to fall, seeing their steepest drop since the end of the financial crisis, with Wales, the East Midlands and the West Midlands driving the overall growth.”
House prices in England increased by 1.5% annually in January, slowing from 1.9% growth in December. The average house price in England was £245,000 in January.
House prices in Scotland grew at a slower rate than other countries in the UK, increasing by 1.3% in the year to January, down from 2.0% in the year to December, taking the average house price in Scotland at £149,000 in January.
By contrast, house prices in Wales increased by 4.6% annually in January, reaching £160,00 on average.
The report said: “This continues to be driven by strong house price growth in south-east Wales, likely linked to the abolition of the Severn Bridge tolls.”
In Northern Ireland, house prices increased by 5.5% over the year, taking the average house price to £137,000.
Howard Archer, chief economic adviser at EY Item Club said: “Most recent data and surveys have pointed to muted housing market activity, indicating that heightened economic and Brexit uncertainties are weighing down on a housing market that is already under some pressure from overall challenging conditions.”
He continued: “It should be noted that the overall national picture has been dragged down by the particularly poor performance in London and parts of the South East.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “As always, national average house prices conceal significant regional differences.
“London continues to see the largest annual price fall as those worried about the Brexit fallout err on the side of caution.
“That said, the year has got off to a remarkably good start on the lending front despite ongoing political uncertainty.”
He said several lenders have trimmed rates in an effort to encourage more business.
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said in some areas the market is patchy at best, whereas in others there is more optimism.
“This is borne out perhaps more in the numerous micro markets of London where local factors are often much more relevant than the national picture,” he said.
“Sadly, while political uncertainty remains, stronger demand is likely to remain pent up at least for a little while longer.”
By Vicky Shaw
Source: Yahoo Finance UK