Annual house price growth in the UK was 1.6% in the 12 months to October 2018, the slowest rate of growth since May 2013, data from the latest lender index shows.
Month on month prices were more or less flat, up just 0.2%, taking the average price of a home to £214,534, according to the index from the Nationwide.
Robert Gardner, Nationwide’s chief economist, pointed out that annual price growth has now moved below the 2% to 3% that had prevailed over the previous 12 months.
‘However, this was broadly in line with our expectations, as the squeeze on household budgets and the uncertain economic outlook is likely to have dampened demand, even though borrowing costs remain low by historic standards and unemployment is at 40 year lows,’ he said.
‘We continue to expect house prices to rise by around 1% over the course of 2018. Looking further ahead, much will depend on how broader economic conditions evolve. If the uncertainty lifts in the months ahead, there is scope for activity to pick-up throughout next year,’ he explained.
‘The squeeze on household incomes is already moderating and policy makers have signalled that interest rates are only expected to raise at a modest pace and to a limited extent in the years ahead. Housing market activity still relatively soft,’ he added.
The index report also shows that housing market transactions remain relatively subdued, with little change in activity in recent years. There were 1.2 million transactions in the 12 months to September 2018, still 30% lower than the levels seen in the same period in 2007
The slowest rate of price growth in more than five years is to be expected given the mix of seasonality and wider market instability, according to Russell Quirk, chief executive officer of Emoov.
‘While many were hoping the market may catch a second wind heading towards Christmas this has failed to materialise, and a predictably disappointing Budget where housing is concerned will ensure this air of lethargy remains prevalent over the coming months. Although the market will end 2018 with a limp, not a sprint, it should still match industry predictions where annual performance is concerned,’ he added.
Jonathan Hopper, managing director of Garrington Property Finders, believes that weak confidence and stagnating prices are dominating the market and a stand-off between buyers and sellers on what really is a fair price is not helping.
‘Buyers are looking for a deal which takes into account Brexit uncertainty, while many sellers feel this is already priced in and are increasingly digging in their heels on how low they’ll go to get sold,’ he said.
‘With affordability already stretched, this mismatch on perceived values looks set to continue until a clearer picture emerges of what a post-Brexit UK will look like,’ he added.
