January saw the slowest annual rate of house price growth since February 2013, according to Nationwide.

House price growth ground to a halt in January as economic uncertainty continued to deter buyers and sellers.

The average cost of a UK property rose by just 0.1% in the year to the end of January to stand at £211,966, according to Nationwide Building Society.

It was the slowest annual rate of house price inflation since February 2013, and down from December’s already subdued figure of 0.5%.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Uncertainty seems to be the main issue plaguing the housing market, with potential buyers and sellers sitting on their hands and waiting to see what happens with Brexit.” 

But despite the stagnant growth, Nationwide is not predicting a housing market correction and continues to expect low single digit property price rises for 2019.

Why is this happening?

The considerable political and economic uncertainty caused by the terms on which the UK will leave the EU has caused potential buyers and sellers to wait until the situation becomes clearer.

As a result, transaction levels have fallen, leading to the stagnation in house price growth.

But the market continues to be supported by high levels of employment and low borrowing costs, which are preventing a fall in property values.

Above: Four-bedroom house for sale near Hildenborough, Kent, for £850,000

Who does it affect?

The ongoing shortage of homes for sale is frustrating for those who want to go ahead with a purchase, as it means they have a lack of choice.

But despite the number of properties estate agents have on their books remaining close to record lows, Nationwide said there had been a “modest shift” in the balance between supply and demand during January in favour of buyers.

This is good news for those who want to purchase a new home as it puts them in a stronger position to negotiate a discount on a property’s asking price.

What’s the background?

Going forward, Nationwide said the near-term outlook for the property market was heavily dependent on how quickly the uncertainty surrounding Brexit lifts, although over the longer term it will be determined by the performance of the wider economy.

Robert Gardner, Nationwide’s chief economist, said: “The economic outlook remains unusually uncertain.

“However, if the economy continues to grow at a modest pace, with the unemployment rate and borrowing costs remaining close to current levels, we would expect UK house prices to rise at a low sing-digit pace in 2019.”

But Hansen Lu, property economist at Capital Economics, pointed out that even if a Brexit deal was agreed, the market was likely to continue to be held back by affordability constraints.

He added that any upswing in the economy would be likely to lead to interest rate rises, which would also act as a brake on demand.

Top 3 takeaways

  • House price growth ground to a halt in January
  • The average cost of a UK property rose by just 0.1% in the year to the end of January to stand at 211,966
  • It was the slowest annual rate of house price inflation since February 2013

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