London, the South East and East of England Record Lowest House Price Growth
London, the South East and East of England have recorded the lowest levels of house price growth over the past year for the first time since 2009, according to the latest House Price Index from the Office for National Statistics (ONS).
The data, which covers the year to July 2018, found that the average UK house price rose by 3.1%, which is down slightly from the 3.2% rate of growth recorded in June. This is the lowest annual increase since August 2013, when it was 3.0%.
The annual growth rate for UK house prices has slowed since mid-2016 and has remained under 5%, with the exception of October 2017, throughout 2017 and into 2018. This slowdown over the past two years was driven mainly by declines in the south and east of England.
The lowest annual growth rate recorded in July this year was in London, where the average house price dropped by 0.7%, down from an increase of 0.3% in the year to June 2018.
In July, the average UK house price stood at £231,000. This is £6,000 higher than in July last year and £2,000 higher than in June 2018.
By property type
Across the UK, all houses showed an increase in the average price in July when compared to the same month last year. Detached houses marked the greatest rise, at an average of 4.6%, taking the typical value to £352,000.
The average price of a flat or maisonette grew by 0.6% in the 12 months to July, to reach £208,000. This is the lowest annual growth of all property types.
London, the South East and East of England Record Lowest House Price Growth
Weaker growth in UK flats and maisonettes was driven by negative annual growth in London for these property types. The capital accounts for around 25% of all UK flat and maisonette sales.
By country
The main contributor to the increase in UK house prices during July was England, where the average property value rose by 3.0%, to hit £249,000.
Wales saw house prices increase by an average of 4.2% over the year to July, to reach £157,000. In Scotland, the average price rose by 3.2%, taking the typical value to £152,000.
The average house price in Northern Ireland currently stands at £133,000, following 4.4% growth in the year to the second quarter (Q2) of 2018.
By region
On a regional basis, London continued to boast the highest average house price in the UK, at £485,000, followed by the South East and East of England, at £327,000 and £295,000 respectively. The lowest average price continued to be seen in the North East, at £132,000.
The North West recorded the highest annual house price growth in July, at an average of 5.6%. The South West and West Midlands followed (both at 4.4%).
The lowest annual house price growth during July was seen in London, where prices fell by an average of 0.7%. The capital has shown a general slowdown since mid-2016.
The second lowest annual growth rate was in the South East, at just 1.8%, followed by the East of England, at 2.4%. This is the first time since May 2009 that London, the South East and East of England have been the lowest ranked regions for annual house price growth.
Comments
Post Office Money’s Crysanthy Pispinis reacts to the index: “The findings this month demonstrate that, while some places like London may be cooling, other areas of the country are still showing healthy growth. Recent research conducted by Post Office Money noted that, while London itself may have seen house price decreases, towns within a commutable distance, such as Reading and Luton, have seen nearly 10% growth over the last year alone, due to sustained interest. With first time buyers increasingly citing location as an area they are willing to compromise on (19%), it follows that buyers have been looking for more affordable yet commutable options.”
Shaun Church, the Director of mortgage broker Private Finance, also comments: “Brexit uncertainty is the greatest test our housing market has faced since the 2008 financial crisis. The fact that property prices are still growing, albeit at a more modest rate, is a testament to the resilience of the UK property market. As gloomy predictions are made about the future of the housing market should we face a no deal Brexit, UK homeowners should take solace in this persistent annual house price growth.
“House price performance remains incredibly varied across the UK. London is the only UK region experiencing falling prices, as buyers increasingly look to the commuter belt for more affordable properties. Meanwhile, house prices in other regions – particularly the North West – have seen annual growth of upwards of 4%. The imbalance between supply and demand continues to have a strong influence on regional affordability, and will continue to do so until the current housing shortage is addressed.”
The Investment Manager at property investment platform British Pearl, James Newbery, has his thoughts: “Growth is soldiering on at a rate that is flat lining, but not nose-diving, amid fraught headlines proclaiming a hard exit from the EU will push Britain’s housing market over the edge.
“These figures prove property in the UK is actually standing firm in the face of the looming no deal sledgehammer. If the market is turning, it’s turning like a tanker with incredible growth of nearly 6% on average still being achieved in the North West.
“Transaction levels are still woefully low year-on-year, which, besides a no deal Brexit, is the other main source of concern that a Day of Reckoning could be brewing for some areas where growth has been strongest.
“However, a resilient labour market, improving household incomes and a weak supply of new stock have kept prices afloat in choppy seas, and bricks and mortar is still streets ahead of inflation across great swathes of the country.”
