New figures published by the Office for National Statistics (ONS) have painted a somewhat bleak picture of the UK housing market. As Brexit uncertainty continues to affect demand, national house-price growth in Britain fell to just 0.7% for July, a significant fall from the 1.4% in June. This is the slowest recorded growth rate since 2012, according to the ONS.
Four of nine English regions experienced significant falls in average house prices, concentrated primarily in the north-east. Year-on-year, the average UK property price increased by a disappointing £2,000 to hit £233,000 in July. Average house prices remain at their lowest in the north-east, where a typical home now costs £127,000. This is also Britain’s only region where average property prices are still below those recorded before the 2008 financial crisis.
Much of the slowdown has been blamed on Brexit uncertainty, with both buyers and sellers showing reluctance to make important decisions. Some economists have stated that falling house prices could play into the hands of first-time buyers, though there is still an enormous disparity between average earnings and typical UK property prices.
Unsurprisingly, London is still the most expensive place to purchase a property in the UK, with average property prices having fallen 1.4% to hit £478,000.
Speaking on behalf of Zoopla, research and insight director Richard Donnell warned that the current trend was likely to continue well into next year.
“The reality is that buyers are simply being more cautious, and this has reduced the impetus for house price growth,” he said.
“Weaker levels of house-price growth are set to be a feature of the market for the rest of this year and the first half of 2020 at least.”
Significant declines in the south-east
Following in the footsteps of London, the south-east of England now seems to be headed for an ongoing market correction. Founder and director of independent estate agents James Pendleton, Lucy Pendleton, commented on the ‘dramatic’ situation in the region.
“Until now, it was London undergoing a bit of a reality check, but the south-east has stolen the capital’s crown as the biggest loser in dramatic fashion,” she said.
“The property market across the whole of the south of England has seen annual falls of late, and funnily, that’s a good thing.”
“It is encouraging sellers to be more realistic, particularly those who are selling in London and buying elsewhere.”
PwC economist Jamie Durham highlighted how, despite 17 consecutive months of property value declines, London’s property market remains almost completely inaccessible for most.
“Nonetheless, the capital remains the most unaffordable in the country at an average price of £478,000,” he said.
“Among other factors, the capital and surrounding areas are particularly affected by Brexit uncertainty, and price growth is likely to remain weak or negative until this uncertainty subsides.”
The Brexit effect
One of the few things on which most economists agree is the extent to which the so-called ‘Brexit effect’ is maintaining a stranglehold over the UK property market. Particularly from the buyer’s side of the equation, it’s understandable that consumers and investors simply don’t have the assurances they need to make such enormous decisions.
Irrespective of whether the UK crashes out of the European Union on October 31, experts aren’t expecting to see a radical turnaround in the near future, at least.