grew at the slowest rate in almost six years in November as wavering consumer confidence before the UK’s departure from the EU took its toll on the housing market.
Prices grew by 0.3% in the year to November, down from 1.5% in October, according to the Halifax house price index, published on Friday.
The last time the annual growth rate of house prices was as weak was in December 2012, when the UK economy was contracting.
The average price of a UK home was £224,578 in November, 1.4% lower than the previous month.
Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, blamed “Brexit uncertainty for the slowdown in price growth, at a time when unemployment remains near four-decade lows and wages are showing tentative signs of increasing faster than inflation.
Halifax paints a weaker picture of house price growth than other reports but most indicators used by economists point to a subdued market. Nationwide’s equivalent measure, published last week, showedin the year to November, well below the average in recent years and only slightly above its lowest level since May 2013.
Housebuilder Berkeley Group warned on Friday that the short-term outlook is “clearly uncertain due to the ongoingprocess and a number of headwinds in the operating environment in London and the south-east”. The uncertainty has a “consequential adverse impact on investment levels and transaction volumes”, Berkeley said in a statement.
Even if the government manages to secure a Brexit transition deal, economists expect higher borrowing costs as the Bank of England raises interest rates andin prices.
Economists have cited a lack of new housing supply – as well as other factors such as– for sustaining rapid house price growth in the UK in recent years, in spite of weak real wage growth.
Affordability concerns have mounted to the point that many economists believe a continuation of the growth trend is unsustainable. Full-time workers could expect to pay about 9.7 times their annual salary on purchasing a newly built home in England and Wales in 2017 according to the Office for National Statistics. In 1997 it was.
“The fundamentals suggest that an acceleration in house price growth is unlikely,” said Hansen Lu, a property economist at Capital. “House prices are still very high relative to incomes and this is unlikely to change soon.”
Rightmove, the property website, is forecasting zero growth in house prices across the UK in 2019, amid “stretched” buyer affordability.
Prices in London and the south-east, theregions, are forecast to fall, after an increase of 40% in the average price over five years. Commuter belt regions around the capital will see prices fall by 2%, while Greater London prices will fall by about 1%, Rightmove said.
UK house price growth slips to six-year low amid Brexit uncertainty – The Guardian