UK house price growth slumps to five-year low

Annual house price growth has slowed to its lowest level since 2013.

Figures from the Office for National Statistics show that average house prices in the UK increased by 2.5% in the year to December - down from 2.7% in November.

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.

The average UK house price was £231,000 in December, £6,000 higher than a year earlier. On a monthly basis, prices rose by 0.2%.

Prices in Northern Ireland went up by 5.5% over the year, compared to 5.2% in Wales and 2.4% in Scotland.

House prices in England grew at the slowest rate compared to other countries in the UK, increasing by 2.3%.

The West Midlands enjoyed the strongest annual house price growth, with prices rising by 5.2% over the year to £200,388.

This was followed by the East Midlands and Yorkshire and The Humber, both going up by 4.2%.

The lowest annual growth was in the North East, where prices fell by 1.0% over the year.

While London house prices have fallen by 0.6% over the year, the area remains the most expensive place to purchase a property at an average of £474,000, followed by the South East and the East of England, at £325,000 and £290,000, respectively.

Brexit uncertainty

Property experts point towards Brexit uncertainty as the main reason for the slowdown in the market.

Jonathan Hopper, managing director of Garrington Property Finders, says: “The confidence-sapping uncertainty of Brexit and Britain’s political turmoil have stripped the market of momentum. Buyers may have fewer properties to choose from, but the lack of competition is enabling them to drive hard bargains and secure substantial discounts.

“Barring a surprise Brexit resolution between now and 29 March, the slow, buyers' market is set to continue.”

Jeremy Leaf, north London estate agent and a former Royal Institute of Chartered Surveyors residential chairman, says that if a deal is struck with the EU we could see a turnaround in house price growth.

He says: “If the chances of a deal with our European partners improve, we expect to see more balance between supply and demand and a firming up of prices without necessarily seeing a significant boost in them.”

Lucy Pendleton, founder director of independent estate agents James Pendleton, says: “Estate agents and economists desperately tried to read the tea leaves last year, blaming every backward step on Brexit and every bounce on lack of supply.

“In truth, the veil that has been drawn by politics across the housing market’s true condition will only be lifted once we know what the UK’s future relationship with the EU looks like.”

This article was originally written by our sister publication Moneywise.

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