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House price growth drops to slowest rate since 2013

Written by: John Fitzsimons
Annual house price growth dropped to 2.5% in the 12 months to December 2018, according to the latest house price index from the Office for National Statistics.

That figure is down from 2.7% the previous month, and means house prices grew at the slowest rate seen since July 2013.

The north east saw the worst results, with house prices dropping by 1% over the year, while London saw prices drop 0.6%.

Other regions performed far better. Northern Ireland saw prices rise by 5.5% over the 12 months, though it remains the cheapest country in the UK in which to purchase a property, with typical prices of £137,000. Wales also saw strong growth of 5.2%, while the West Midlands was the top performer in England, with prices also rising by 5.2%.

According to the ONS, the average house price in December 2018 stood at £231,000, up by £6,000 from December 2017.

Buyers enjoy some breathing space

John Goodall, chief executive of Landbay, noted that the last two years had seen a pronounced slow down in house price growth, and pointed out that the combination of low interest rates, solid wage growth and slowing prices would give buyers “a little more breathing space”.

Any boost to affordability would go some way to rectifying the subdued transaction volumes we saw in 2018. In the longer term though, this could begin to push up house prices as demand outweighs supply,” he added.

Mark Harris, chief executive of SPF Private Clients, suggested that between the time of year and the “ongoing Brexit shenanigans” the slowdown in house price growth was not really surprising.

He continued: “Lenders remain keen to lend, with rates extremely competitive. Not all lenders can compete to offer the lowest rate with some easing criteria instead, which is making lending more accessible for certain groups, such as older borrowers or the self-employed with just one year’s accounts.

“With Brexit uncertainty unlikely to lift anytime soon, interest rates don’t seem to be going anywhere either for the time being at least.”

Who knows what’s going on?

Lucy Pendleton, founder director of estate agent James Pendleton, said that industry figures are economists “desperately tried to read the tea leaves” last year, blaming every hiccup on Brexit and any bounce in prices on the 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,” she continued.

“Ultimately, 2019 could be the year that we come to realise just how much the bellows of Help To Buy and stamp duty relief for first-time buyers can really stoke the market.”

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