Average house prices in the UK increased by 1.7 per cent in the year to the end of January according to new government figures.
This annual growth rate is sharply down from the 2.2 per cent reported a month ago and represents the lowest growth figure since 1.5 per cent reported back in June 2013.
London was the region of the UK with the worst performance, falling by 1.6 per cent - again, that’s significantly worse than the 0.7 per cent fall reported a month ago. It’s also the worst figure for the capital’s housing market since September 2009.
Better figures were reported in the East Midlands - up 4.4 per cent on the year - and the West Midlands, which saw a 4.0 per cent rise.
Agents and other players within the sales industry have reacted with growing concern - although some believe the circumstances on the ground give rise to some hope.
“The mounting political uncertainty has undoubtedly contributed to the underwhelmingly low house price growth. It is no surprise to see pockets of the market taking a reserved approach, yet regions such as the North West, and the East and West Midlands are bucking the trend. This is especially surprising given that we are currently only a matter of days away from potentially leaving the EU” says Nick Leeming of Jackson-Stops.
“Many of our branches reported a strong start to the year, as buyers are becoming impatient with ongoing economic and political turmoil. It is frustrating that we are still unable to see the light at the end of this Brexit tunnel, however we are still expecting a modest spring bounce” he adds.
“After last month’s encouraging figures, this month’s UK house price index is much gloomier, showing once again it is dangerous to read too much into one set of numbers” cautions Jeremy Leaf, north London estate agent and a former RICS residential chairman.
“However, we are finding that the mood reflected on the ground - a patchy market at best in some areas whereas in other, sometimes even those adjoining - there is more optimism. This is borne out perhaps more in the numerous micro markets of London where local factors are often much more relevant than the national picture” he continues.
Meanwhile Marc von Grundherr, director of London agency Benham and Reeves, says: “Much like Brexit itself, it seems to be one step forward, two steps back where the UK property market is concerned at the moment. London continues to suffer most as the higher price of property is resulting in more drastic adjustments than elsewhere. However, this is seeing a returning air of confidence from an investment standpoint and we’ve seen a consistent level of interest from the foreign market investors so far this year.”
Jeff Knight, marketing director for Foundation Home Loans says: “The Office for Budget Responsibility has already downwardly revised its forecasts for the year and we are no closer to knowing what will happen on March 29. The lowest annual rate of growth since 2013 is also a pretty clear marker. When it comes to buying behaviour, hesitation is certainly taking over.”
And John Goodall of buy to let specialist lender Landbay adds: “Affordability remains a key concern. When you also factor in poor saving rates and relatively weak wage growth, saving towards a deposit on a home of their own [for first time buyers] is near impossible. That is why we need to shine a light on investment in house building, ensuring it is strategic in solving the affordability problem.”