Property prices see lowest annual growth rate since 2009.

Data released from the ONS, Office of National Statistics, show the property markets lowest annual growth rate since September 2009. In the year to June, London property prices dropped 0.7%.

Property prices continue to cool.

As property prices continue to cool, it highlights an overall decline in the capital since the Brexit vote in 2016.

According to Nationwide, UK house prices have had their biggest monthly fall for six years, taking more than £2,200 off the typical price tag,

The average property value fell by 0.5% – or £73 a day – in August, the biggest month-on-month decline since July 2012, said Nationwide, Britain’s biggest building society.

The fall takes the annual rate of house price growth down to 2%, though this is still above the 1% increase that Nationwide is pencilling in for 2018 overall. The average house price is now £214,745.

The capital has seen the slowest growth, Nevertheless, London continued to be the region with the highest average house price, at £477,000.

The strongest performer was the West Midlands, which experienced house price growth of 5.8%.

The slowest growth was in England where house prices increased by 2.7% over the year to June, taking the average property value there to £245,000.

Wales saw average house prices increase by 4.3% over the previous 12 months to stand at £157,000.

In Scotland, the average price increased by 4.8% over the year to reach £150,000.

The average price in Northern Ireland was £133,000, marking an increase of 4.4% over the year.

What the economists are saying about the housing market.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics:-

“Increases in mortgage rates have restricted the amount that home-buyers are willing and able to borrow.”

“Prices in the capital are more sensitive to changes in mortgage rates than elsewhere, because loan-to-income ratios are extremely high. The reduction in jobseekers from the EU, due to Brexit, also has hit demand in the capital.”

Falling prices in London is likely to have driven the decline as the London market is in the grip of a slowdown.  The ONS said earlier this month that their data showed prices in the capital falling at their fastest annual rate since the depths of the financial crisis.

Nationwide’s chief economist, Robert Gardner: –

“Despite its slower pace, annual house price growth remained within a fairly narrow range of about 2% to 3% over the past 12 months. This suggested there was little change in the balance between demand and supply in the market.”

“Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates.”

He added that subdued economic activity and pressure on household budgets were likely to continue to exert “a modest drag” on house price growth and market activity this year, though borrowing costs were likely to remain low.

Howard Archer, the chief economic adviser at EY Item Club: –

“The decline showed that increases in the months to August were “a false dawn for house prices”.

“We suspect that any meaningful housing market upturn will remain elusive over the coming months,” he said. “The fundamentals for house buyers are likely to remain challenging, and they will not be helped by the Bank of England hiking interest rates.”

What the industry are saying about the housing market.

Sam Mitchell, the chief executive of the estate agent Housesimple.com:-

“Walk into an estate agents in Liverpool or Manchester and they will tell you something entirely different from an agent in the capital. Properties are flying out the door, many at near asking price, and there’s a real appetite to buy.”

However, he said the picture was “far more challenging” in London, with large swathes of the capital still out of reach for people on middle and low incomes.

Some estate agents said that while London prices might be in the doldrums, the outlook in parts of the north of England was more positive.

Jonathan Samuels, of property lender Octane Capital: –

“There’s a widespread caution in the property market at present, caused by the uncertainty of Brexit and the ongoing squeeze on household income, as revealed by the latest July inflation data,” “Households are wary of taking on more debt, all the more so following the recent interest rate rise, which could further undermine sentiment.”

“The jobs market might be holding up but if inflation maintains its grip on UK households, it’s hard to see much improvement in the UK property market during the rest of the year.”

“As for 2019, a no-deal Brexit could wreak further havoc amid UK bricks and mortar.”

“A Brexit no deal could hit prices in the capital, especially at the higher end, like a sledgehammer.”