House price growth hits 5-year low
The annual growth rate of UK house prices has slowed since mid-2016 and has remained under 5%, with the exception of October 2017, throughout 2017 and into 2018.
The ONS said this slowdown over the past two years was driven mainly by a slowdown in the south and east of England.
London, it noted, has shown a general slowdown in its annual growth rate since mid-2016. The North East was the only other region to suffer a fall, where prices decreased by 0.6% in the year to June 2018.
However, other areas saw notable rises.
Around the UK this was illustrated with Scotland (up 4.8%), Wales (up 4.3%) and Northern Ireland (up 4.4% over Q2) outperforming the national average.
England as a whole saw prices rise 2.7% but here the West Midlands (up 5.8%) and East Midlands (up 4.1%) witnessed the biggest rises.
The data shows the average property price in England was £245,000, in Wales it hit £157,000, in Scotland it was £150,000, while in Northern Ireland it rose to £133,000.
Unsurprisingly, despite the fall, London remained the most expensive region with the average property costing £476,752 while the North East was the cheapest at £127,271.
Semi-detached houses showed the biggest increase, rising by 4.4% in the year to June 2018 to £216,000.
The average price of flats and maisonettes increased by 0.5% in the year to June 2018, to £204,000, the lowest annual growth of all property types.
This weaker growth in UK flats and maisonettes was driven by negative annual growth in London for this property type, with London accounting for around 25% of all UK flats and maisonette transactions.
ONS head of inflation Mike Hardie said: “The housing market across the UK again slowed with London house prices seeing their largest annual fall since September 2009 in the aftermath of the economic downturn.”
Shaun Church, director of London-based mortgage broker Private Finance, said a slight correction in house prices was no bad thing for the UK property market.
“Years of steady house price hikes have created huge affordability issues for first-time buyers, so the fact that annual house price growth has fallen to its lowest point in five years will be a welcome change for many,” he said.
“The trend has been reversed completely in the capital, and with negative price growth also seen in the North East, it could be that other regions will see a more relaxed pace of house price rises in the coming months.
“House prices are still rising faster than wages and until the two are more evenly matched, affordability issues will continue to impact homeownership levels,” he added.
Yopa chief property analyst Mike Scott added: “The number of buyers in the market is flat, while the number of new sellers has increased slightly, so estate agents’ stock has also gone up a little. The number of house sales is a bit lower than it was at the same time last year.
“However, mortgage approvals are starting to turn up again, indicating that buyer numbers are likely to recover by the end of the year.
“We do not expect prices to turn negative as long as they are being propped up by low unemployment, low mortgage interest rates and limited supply.”