House price growth drops to its lowest level in 7 years as London slowdown spreads out to regions

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House price growth drops to its lowest level in seven years as London slowdown spreads out to the regions

  • Annual house price growth slows to just 0.7 per cent, the lowest in seven years
  • House prices are now falling in the North East and the South East
  • London sees small monthly uptick in price growth after months of falling prices 

House price growth came to a near standstill in the year to July as the value of homes rose by just 0.7 per cent, the slowest growth in seven years, according to official data.

The figures from Office for National Statistics continue a three-year trend of declining growth in UK house prices, driven mainly by the south and east of England.

London prices however saw a small uptick of 1 per cent in July, despite seeing the fastest drop in house prices since the recession in the year to May

Houses across the UK grew in value by just 0.7 per cent in the year to July

Houses across the UK grew in value by just 0.7 per cent in the year to July

This is in contrast to the South East outside the capital, which saw a 0.7 per cent drop in house price growth, suggesting London’s slowdown is now rippling out from the capital into the wider regions. 

Jonathan Hopper of house buying agents Garrington Property Finders said: ‘London’s pain has proved contagious, and price falls have now spread from the capital to southern England as a whole.

‘The sheer size of the market in London and the commuter counties has acted as a deadweight on the English market as a whole – where price growth is now barely in growth territory.

‘As the Southeast overtakes the capital as the southern region with the fastest falls in price, we are seeing strategic buyers return to the London market and seeking to drive home their advantage.’

House price growth was strongest in Wales where prices increased by 4.2 per cent in the year to July, down slightly from 4.3 per cent in the year to June.

House price growth in the UK has generally slowed since the middle of 2016

House price growth in the UK has generally slowed since the middle of 2016

London continues to have the highest house price in England followed by the South East

London continues to have the highest house price in England followed by the South East 

The lowest annual growth was in the North East, where prices fell by 2.9 per cent over the year to July, followed by the South East where prices fell by 2 per cent over the year.

Scotland saw annual growth of 1.4 per cent, while Northern Ireland saw growth of 3.5 per cent.  

Estate agent Yopa’s Mike Scott said: ‘We expect that the rate of house price growth shown in this report will slow further for the rest of the year, ending the year with house prices virtually identical to the end of last year.

‘However, the economic fundamentals underpinning the housing market remain strong, with low mortgage interest rates, good mortgage availability, low unemployment and rising wages, and we do not expect a UK-wide downturn in house prices while those fundamentals remain in place.’

First-time buyers are seeing prices rise faster than home movers but price growth for this group is still only 0.9 per cent.

UK Finance data released yesterday suggested that price rises are not deterring first-time buyers as the number of people buying their first property grew by almost 2,000 in the year to July. 

Howard Archer, economic adviser at EY said: ‘We expect house prices to only rise around 1 per cent on most measures over 2019.’

Average UK house prices hit £232,710 in July 2019

Average UK house prices hit £232,710 in July 2019

How do the other indices compare?

Earlier this month Halifax’s house price report, which is more recent but less comprehensive than the ONS’s, found that house prices increased just 0.3 per cent between July and August this year, and just 1.8 per cent on August last year.  

The bank said prices were being propped up due to a shortage of properties on the market, with homeowners staying put in the face of political uncertainty.

Halifax’s Russell Galley said there was ‘evidence of both buyers and sellers exercising some caution’, with ‘ongoing uncertainty continuing to weigh on consumer sentiment’.

He added that the ‘single biggest driver of both prices and activity over the longer-term remains the dearth of available properties to meet demand from buyers’.

Average price growth by country / region 
Country or region Price Monthly change Annual change
England £248,837 0.50% 0.30%
Northern Ireland (Quarter 2 – 2019) £136,767 0.80% 3.50%
Scotland £153,968 0.70% 1.40%
Wales £165,303 1.00% 4.20%
East Midlands £194,798 0.30% 1.90%
East of England £292,444 0.10% -0.50%
London £477,813 1.00% -1.40%
North East £127,466 -2.10% -2.90%
North West £166,022 1.00% 2.30%
South East £320,454 -0.70% -2.00%
South West £258,602 1.20% 0.70%
West Midlands £199,802 1.20% 1.80%
Yorkshire and The Humber £167,181 1.90% 3.20%
Source: Office For National Statistics 

Nationwide’s report, which came out last month, found prices crept up by 0.6 per cent in August.  

The building society’s chief economist Robert Gardner echoed Halifax’s report: ‘Data on the number of property transactions points to a slowdown in activity, though the number of mortgages approved for house purchase has remained broadly stable.’ 

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