House prices fell month on month in September, latest index shows

Annual house price growth fell to just 0.2% in the UK in September and fell by 0.2% month on month, taking the average value to £215,532, the latest lender index shows.

The data from the Nationwide also shows that annual price declines persist in London and the South East on a quarterly basis while Northern Ireland had the strongest growth at 3.4%.

In Wales growth slowed a slowdown to 2.9%, from 4.2% in the previous quarter and in Scotland it remained subdued at 0.8%, up slightly from 0.4%. England remained the weakest performing home nation, with prices essentially flat compared with a year ago.

Robert Gardner, Nationwide’s chief economist, pointed out that September was the tenth month in a row in which annual price growth has been below 1%. ‘Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensification of Brexit uncertainty,’ he said.

‘The underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years. Healthy labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook,’ he explained.

London was the weakest performing region in the third quarter, closely followed by the surrounding Outer Metropolitan region, with annual price declines of 1.7% and 1.5% respectively.

While this marks the ninth quarter in row price that prices have fallen in the capital, they are still only around 5% below the all-time highs recorded on the first quarter of 2017 and around 50% above their 2007 levels, meaning UK prices are only around 17% higher than their 2007 peak.

Elsewhere in England, annual price growth remained relatively weak with the North West the best performing region, with a 2.5% year on year rise. House price growth across the North, the North West, Yorkshire and Humberside, the East Midlands and the West Midlands slowed to 1.4%.

But this remained ahead of that in the South with London, Outer Metropolitan, Outer South East and East Anglia recording a 0.8% fall in the third quarter. These trends are not entirely unexpected, however, says the Nationwide, as affordability is still more stretched in the South, with prices further above their pre-financial crisis levels.

Sam Mitchell, chief executive officer of online estate agent Housesimple, pointed out that it was not a normal September for the housing market. ‘As the deadline to Brexit edges closer it is reassuring to see any growth at all, albeit very slow, with some buyers and sellers keeping their nerve in these times of political uncertainty. Life moves on despite the best efforts of our politicians,’ he said.

‘House prices in London and the South East have been hit particularly hard, but let’s not forget prices continue to grow in all other regions. While the North/South divide may be narrowing, Northern regions are still experiencing consistent growth as buyers make the most of increased affordability alongside the ultra-competitive mortgage rates of late,’ he explained.

‘It’s hard to say what the next month will have in store; home movers will either be looking to strike fast to complete deals before we leave the European Union, or hesitation could continue to dominate the market. Either way, people should consider taking advantage of the quieter period and strong economic fundamentals to make the move up the ladder whilst they may be able to negotiate a favourable deal,’ he added.

Mike Scott, chief property analyst at full-service estate agent Yopa, believes that it now seems quite likely that year on year house price growth will dip into negative territory in the last quarter of 2019.

‘However, the economic fundamentals of low unemployment, rising wages, good mortgage availability and low mortgage interest rates are still strong, and we expect a rapid recovery to a more normal level of activity and price growth once the uncertainty is finally resolved,’ he said.