Annual house price growth in the UK slowed to a five year low in June with values up just 2%, the latest national index figures show.
Month on month prices increased by 0.5% to an average of £215,444 and prices are now forecast to rise by just 1% in 2018, according to the index from lender the Nationwide.
The lender also released its latest quarterly data which shows that in the second quarter of the year London has the weakest housing market with prices down 1.9% year on year while on England they were down 0.4%.
Indeed, most regions saw a slowing in the annual rate of house price growth in the second quarter with only Scotland and Northern Ireland seeing a notable price growth pickup with values up 3.1% and 2.1% respectively.
Robert Gardner, Nationwide’s chief economist, pointed out that annual house price growth has been confined to a fairly narrow range of 2% to 3% over the past 12 months, suggesting little change in the balance between demand and supply in the market over that period.
‘There are few signs of an imminent change. Surveyors continue to report subdued levels of new buyer enquiries, while the supply of properties on the market remains more of a trickle than a torrent,’ he said.
‘Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates. Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low. Overall, we continue to expect house prices to rise by around 1% over the course of 2018,’ he added.
Jonathan Hopper, managing director of Garrington Property Finders, pointed out that there are disparities depending on location. ‘Areas where buyers perceive good value, such as the Midlands, where prices have risen relatively modestly since the financial crisis are still seeing properties sell quickly amid brisk demand,’ he explained.
‘As a result prices are now edging up at respectable levels. Such price growth cannot be dismissed as merely the by-product of short supply, it’s also a testament to buyer appetite,’ he added.
The outlook is not gloomy, according to Russell Quirk, chief executive officer of estate agent Emoov. ‘There has certainly been a decline in price growth since the Brexit vote but prices remain buoyant and so while the rate of growth may have stalled slightly, home owners are yet to see the value of their bricks and mortar investment decline,’ he said.
‘In addition to this, there have been positive signs across the board where monthly price growth is concerned and this is positive news for the long term forecast as the market continues to find its feet,’ he added.
