UK house prices grew at their slowest rate in seven years early in 2019 as London house prices plunged, according to data published today.
UK properties only grew by 0.6 per cent in February compared to the same month last year, the Office for National Statistics (ONS) revealed, their worst rate since September 2012.
London house prices suffered a 3.8 per cent drop in value over the same period, even worse than January’s 2.2 per cent fall and their worst drop since 2009, with experts warning London’s drop was not a blip.
Mike Hardie, head of inflation at the ONS, said: “Annual house price growth has slowed to the lowest rate in close to seven years.
“Growth in Wales and the west of England was offset by a sustained fall in London and falling prices in the south east for the first time since 2011.”
The UK’s fractional rise in property value left the average nationwide house price cost £226,000 in February.
Meanwhile the average London property price cost £460,000, while the south east fell to £316,000.
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Jamie Durham, economist at PwC, said: “Weak national house price growth continues to be driven by the south east, and particularly London. Uncertainty around Brexit is weighing on the capital’s housing market.”
“The property market has finally caught up with what we have been seeing on the ground for some time – in other words, a lot of caution and 'wait and see’ until political uncertainty lifts a little at least,” said Jeremy Leaf, north London estate agent and a former Rics residential chairman.
“Nevertheless, transaction numbers have proved more resilient than expected, demonstrating that although business is tough realistic buyers and sellers are still seeking value, particularly in this traditionally busy spring buying season for the market.”
Howard Archer, chief economic adviser to the EY Item Club, said that Brexit’s delay until 31 October could lend house prices a boost, but such a scenario is unlikely.
“It is possible that the avoidance of a no-deal Brexit at the end of March could provide a modest boost to the housing market through easing some of the immediate uncertainty and concerns,” he said.
“However, we suspect it is more probable that with Brexit most likely being delayed until 31 October, prolonged uncertainty will weigh down on the housing market and hamper activity.”
Stamp duty is an unwelcome brake on UK house prices
Ray Rafiq Omar, chief executive of Unmortgage, blamed government intervention in buy-to-let and stamp duty for the slowing rate of house prices amid the Brexit uncertainty clouding the market.
“The market continues to lack any movement, not helped by the stamp duty increases a few years ago for high value homes, with many families choosing to improve rather than move as they can’t move up the housing ladder,” he said.
“It remains in the government’s hands to return to domestic policy issues, like housing and homeownership, sooner rather than later. “
Buy-to-let mortgage marketplace Landbay warned Brexit uncertainty “is more acute than ever”, with homeowners and buyers unable to predict what will happen next.
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“This means that while transactions volumes continue to tick over, the truth is we aren’t currently in a buyers nor a sellers market,” said chief executive John Goodall. “Therefore it’s understandable that many of those in a position to move are holding fire for now.”
However, Pete Mugleston, MD of Online Mortgage Advisor, has credited the lower house prices with a 95 per cent year-on-year boost in first-time buyer enquiries.
“This shows that even in economic uncertainty and political instability, there is always a silver lining,” he said.
Other commentators reiterated this possibility, saying February was a month of heightened tension before Brexit's original 29 March deadline was twice extended.
“This data, which shows purchases made in the year to the end of February, captures the market at its most contorted,” said Jonathan Hoper, MD of Garrington Property Finders.
“Fears of a no-deal Brexit peaked in the final months of this period, forcing thousands of would-be sellers and buyers to hit the pause button.
“Since then the prospect of a chaotic, cliff edge Brexit has receded steadily. And while there are many more months of the Brexit drama to play out, a tentative return to stability is now bringing both buyers and sellers back to the table.”