Annual house price growth slows to weakest levels seen since 2012
Annual house price growth has slowed to the lowest annual rate seen in close to seven years – dragged down by year-on-year price falls in London and the south-east of England, official figures show.
Across the UK, house prices increased by 0.6% in the year to February, slowing down sharply from a 1.7% annual increase in January.
It was the lowest annual increase since September 2012 when it was 0.4%, according to the figures released jointly by the Office for National Statistics (ONS), Land Registry and other bodies.
The report said that over the past two years, there has been a slowdown in UK house price growth, driven mainly by a slowdown in the south and east of England.
Mike Hardie, head of inflation, 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 average UK house price was £226,000 in February 2019, with prices having previously peaked at £232,000 in August 2018.
In London, house prices fell by 3.8% over the year to February 2019, falling faster than a decrease of 2.2% in January 2019.
In the south-east of England, prices fell by 1.8% over the year.
Elsewhere in England, house prices in the North West showed the strongest annual growth, at 4.0% in the year to February, followed by the West Midlands which saw a 2.9% annual increase.
While London house prices are falling over the year, the area remains the most expensive place in the UK to purchase a property at an average of £460,000, followed by the South East and the east of England, at £316,000 and £290,000 respectively.
The North East continues to have the lowest average house price at £125,000 and is the only English region where house prices are yet to surpass their pre-economic downturn peak.
Across England, average house prices increased by 0.4% over the year to February 2019, to reach just under £243,000.
House prices in Scotland fell by 0.2% in the year to February 2019, to reach £146,000 on average.
In Wales, house prices increased by 4.1% annually to reach £160,000 on average. In Northern Ireland, average house prices increased by 5.5% over the year to £137,000.
Howard Archer, chief economic adviser at EY ITEM Club said the figures “very much fuel the overall impression that the housing market is being hampered as buyer caution amid already challenging conditions is being reinforced by recent heightened Brexit and economic uncertainties – although there are significant variations across regions with the overall picture being dragged down by the weakness in London and the South East”.
He continued: “We suspect house prices will rise only 1% over the year and would not be at all surprised if they stagnate.
“Consumers may well be particularly cautious about committing to buying a house, especially as house prices are relatively expensive relative to incomes.
“Also it looks questionable whether the labour market and earnings growth will sustain their recent improvement.”
Jonathan Hopper, managing director of Garrington Property Finders, described the scale of house price falls in London as “breathtaking”.
He said: “The South East of England has caught the capital’s cold, with prices in the commuter counties now falling on an annual basis for the first time in more than seven years.”
Mr Hopper continued: “On the market front line we are finally seeing the first signs of a much-delayed spring bounce, but as this data shows, the market is still highly volatile and after such a weak few months any future progress will be halting at best.”
Jeremy Leaf, north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: “These figures show 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.
“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.”