According to ONS, the annual growth rate has slowed since mid-2016 and has remained under 5%, with the exception of October 2017, throughout 2017 and into 2018.
This slowdown in UK house price growth over the past two years is driven mainly by a slowdown in the south and east of England. The lowest annual growth was in London, where prices decreased by 0.7% over the year, down from an increase of 0.3% in the year to June 2018.
The average UK house price was £231,000 in July 2018. This is £6,000 higher than in July 2017 and £2,000 higher than last month. On a seasonally adjusted basis, average house prices in the UK increased by 0.3% between June 2018 and July 2018, compared with an increase of 0.5% in average prices during the same period a year earlier (June 2017 and July 2017).
As ever, the industry was quick to react. Here's what they're saying...
Russell Quirk, founder and CEO of Emoov.co.uk, says: “While many will be quick to highlight yet another landmark low in the rate of house price growth the bigger picture is that the market has firmly found its feet and is registering strong annual and monthly price growth.
This is even more notable given the seasonality that often plagues market activity during this time with home sales often taking a back seat.
Even the London market has dusted itself down to register positive monthly growth and is the only region to see prices remain lower than this time last year.
The continued affordability of mortgage rates and the stranglehold of housing stock failing to meet demand will ensure that prices continue to climb as we see out the year.
We remain a nation of aspirational home buyers and homeowners and there isn’t a doom and gloom scenario that Mr Carney can formulate that will change this.”
Andy Soloman, Yomdel CEO, had this to say: “Not the most positive reading on the face of it with the lowest rate of price growth in nearly five years, but when viewed in a wider market context, the UK property market is putting in a far more resilient performance than previously expected.
While a fall in transactions and mortgage approvals can’t be solely attributed to a seasonal influence as we head into the quieter summer months, there are signs of sustained market activity and a defiance against wider market conditions.
This firm hand on the tiller has, and will continue, to guide the market through the choppy waves of political uncertainty and there are clear signs of light on the horizon.”
Chrysanthy Pispinis at Post Office Money, said: “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%)1 it follows that buyers have been looking for more affordable yet commutable options.”
Jeff Knight, Marketing Director at Foundation Home Loans, commented: “Mark Carney’s Brexit prediction on house prices caused something of a stir this week among first time buyers, as a drop of 35% is not sustainable in the long-term and could de-stabilise in the shorter period. Where ongoing political turmoil makes the impact to future market activity unclear, the real issue is still ensuring there are affordable homes on offer and younger homeowners are financially supported, not relying too much on the Bank of Mum and Dad, whether they choose to rent or purchase at this stage in their lives.
This includes offering support when obtaining property finances. We know the majority of young buyers often fall at the first hurdle, with some receiving rejections for mortgages due to failing credit checks in the past. Supporting this process by encouraging them to build up a reliable credit record early on will only help when the times comes to sign on the dotted line.”
Alex Depledge, CEO and Co-founder of Resi.co.uk comments: “Whilst the news that house price growth has slowed may be welcomed by those wanting to move or enter the market, there still remain fundamental issues within the sector that are yet to be fixed. A whole generation of renters are being hampered from entering the market by high deposits and lack of activity up and down the ladder. These renters are left paying a fortune in rent particularly in areas such as London, which would equate to a house deposit elsewhere.
Until an adequate solution is found that means supply can match demand, the property market is likely to remain stagnant. We need to see housebuilding targets actually met, injecting movement into the market and helping people get onto the ladder. In the meantime, those that do own need to be aware of the options that are available to them to make their home as suitable as possible if they are unable to move.”
Ishaan Malhi, CEO and founder Trussle, commented: “The slow house price growth in the market reflects the impact of financial uncertainty prompted by Brexit, high inflation and rising living costs.
While slowing house price growth might be a relief for those hoping to get a foot on the ladder, it’s still a tough journey for many. A first-time buyer deposit costs just under two years’ of average earnings.
There are some useful saving tools to help, such as government-backed Help to Buy ISA, which will boost your savings, but more needs to be done otherwise home ownership will remain unreachable for many. We need to ensure more transparency, convenience and certainty to make home ownership affordable and accessible for everyone."
Jeremy Leaf, north London estate agent and a former RICS residential chairman, had this to say: "With the house price index from the ONS and Land Registry now designated as a national statistic, we take these comprehensive and reliable figures seriously, even though they are a little historic. They reflect the market as it was in the summer months - since buyers and sellers have returned from their summer breaks, there has been a little more enthusiasm to sell homes than we have seen for a while.
This is the time of year when we would expect to have more activity and on the ground we are certainly seeing more property coming onto the market and more demand. But it is still hard to gain commitment from buyers because property needs to differentiate itself from the competition in order to attract interest and offers.
Looking forward we are not expecting to see any significant changes or huge movements one way or the other as the market settles down for the rest of the year in a similar pattern."
