Annual house price growth almost at a halt in September

Annual house price growth nearly “ground to a halt” in September, remaining below 1% for the 10th month in a row, according to an index.

Property values increased by 0.2% annually, taking the average UK house price in September to £215,352, Nationwide Building Society said.

House prices fell by 0.2% month on month, following a 0% monthly change in August.

Robert Gardner, Nationwide’s chief economist, said: “UK annual house price growth almost ground to a halt in September, at just 0.2%.

“This marks the 10th 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.

“However, the slowdown has centred on business investment – household spending has been more resilient, supported by steady gains in employment and real earnings.”

Looking at house price growth across the UK in the third quarter of this year, Northern Ireland saw the strongest annual increase, with a 3.4% uplift in property values.

It was followed by Wales, with a 2.9% annual house price increase, and the North West of England, where property values saw 2.5% growth.

London and its surrounding areas saw house prices fall compared with a year earlier. House prices fell by 1.7% annually in the capital.

Mr Gardner said: “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 quarter one 2017 and (around) 50% above their 2007 levels.”

UK house prices generally are around 17% higher than their 2007 peak.

Within England, house prices in northern regions and the Midlands combined have increased by 1.4% annually, while those across southern areas fell by 0.8%.

Mr Gardner said: “These trends are not entirely unexpected, however, as affordability is still more stretched in the South, with prices further above their pre-financial crisis levels.”

Commenting on the report, Howard Archer, chief economic adviser at the EY Item Club, said: “With the economy largely struggling and the outlook highly uncertain, we suspect that house prices will remain soft in the near term at least.

“Consequently, we expect house prices to only rise around 1.0% over 2019 on most measures.

“House price inflation on the Nationwide’s measure looks highly likely to be less than 1% over 2019 and may struggle to be any more than 0.5%.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Uncertainty about Brexit has greatly dampened house prices, though a sustained period of falling prices likely doesn’t lie ahead, provided a no-deal Brexit is avoided.

“The near-term trend in prices looks no better than flat; asking prices rose by a mere 0.2% year over year in September, according to Rightmove.

“In addition, the Building Society Association’s property tracker survey shows that the proportion of households expecting house prices to fall exceeds that expecting them to rise for only the second time in the last decade, implying that buyers will attempt to negotiate big discounts.

“Nonetheless, affordability will continue to be supported by falling mortgage rates.

“The average quoted interest rate for a 75% LTV (loan-to-value) five-year fixed-rate mortgage fell to 1.92% in August, from 2.05% in January.

“It should fall to about 1.80% by the end of this year, as lenders reflect more of the recent decline in their funding costs in new mortgage rates.

“Further solid gains in real wages, supported by low inflation and the tight labour market, also should ensure that house prices continue to rise gradually, though a no-deal Brexit is a clear downside risk.”

Here are average house prices and annual house price changes in the third quarter of this year, according to Nationwide Building Society:

– Northern Ireland, £144,053, 3.4%
– Wales, £159,355, 2.9%
– North West, £166,597, 2.5%
– West Midlands, £194,549, 2.1%
– North East, £127,570, 2.0%
– East Anglia, £232,587, 1.7%
– Scotland, £150,410, 0.8%
– South West, £246,658, 0.5%
– East Midlands, £187,212, 0.4%
– Yorkshire and the Humber, £160,432, 0.1%
– Outer South East (includes Oxfordshire, Milton, Keynes, Aylesbury, Brighton and Hove), £278,134, minus 0.6%
– Outer Metropolitan (includes Hertfordshire, Reading, Slough), £358,833, minus 1.5%
– London, £460,686, minus 1.7%