Average UK house prices increased 4.1 per cent in the year to March 2017, down from 5.6 per cent in the year to February 2017.
House prices in London recorded the second-lowest annual growth at 1.5 per cent. However, London continues to be the region with the highest average house price at £472,000 followed by the south east and the east of England, which stand at £312,000 and £277,000 respectively.
The lowest annual growth was in the north east, where prices decreased by 0.4 per cent over the year, followed by the capital.
Meanwhile, the east of England and the east Midlands both showed the highest annual growth, with prices increasing by 6.7 per cent in the year to March 2017. This was followed by the West Midlands at 6.5 per cent.
What analysts said:
Slowdown concentrated in inner London
Samuel Tombs, chief UK economist, Pantheon Macroeconomics, said: The slowdown is concentrated in inner London, where prices are up just one per cent year-over-year; prices in outer London are rising at a similar rate to the rest of the UK ( five per cent and 4.2 per cent respectively).
"Looking ahead, it’s very hard to see growth in central London prices recovering, given that valuations look stretched, the financial sector is facing an uncertain post-Brexit future and volatility in sterling is undermining property’s safe-haven appeal for overseas investors. And across the rest of the UK, house price growth looks set to remain dampened by sluggish growth in wages and the loan-to-income limits imposed on lenders by the FPC in 2014. As such, we still expect year-over-year growth in national prices to slow to just two per cent by the end of this year."
The market is beginning to stagnate
Andrew McPhillips, Yorkshire Building Society’s chief economist, said: “The headline figure shows house prices have dropped since last month, but if we look at the annual figures, it is clear the average home still costs more than it did at this time last year. The month-on-month decline is yet another indication the market is beginning to stagnate, which supports other recent evidence of lower market activity, such as fewer new buyer enquiries with estate agents. Despite the faltering market, the lack of supply means it is unlikely that prices will fall significantly.
“In real terms, with average wage rises continuing to track below inflation, and rising household costs squeezing budgets, buying a home is becoming increasingly less affordable for many people in the UK, particularly those looking to buy their first home. This stall in the market could be prolonged if homeowners put off committing to a move until after the General Election, with this uncertainty potentially causing those looking for properties or thinking of putting their home up for sale to wait.”
Strong increase in house prices despite Brexit
Matt Robinson, chief executive of Nested, said: “Many people may be fooled into thinking that today’s data shows a housing market suffering from the effects of uncertainty, but I believe that the stable levels of growth are far more conducive to activity. While price growth in the UK housing market has come off the boil somewhat, we continue to see a strong and stable increase in house prices across the country despite the lead up to Brexit and the upcoming General Election. The election may result in a momentary market pause, but we expect it to be business as usual thereafter.
“The effects of a slowing property market in the capital means that many people have been left in long, slow chains – often unable to move because they or the person they are buying from is stuck in limbo. Crucially, this is the unhealthy part of the market that requires urgent attention - building hundreds of thousands of new homes is essential and these pledges are welcome, but the process of buying and selling in the UK has fundamental flaws that need fixing.”