Dramatic slowdown in 2018 house prices
8th January 2019
UK house price growth slowed to just 0.5% in 2018, down from 2.6% in the previous year, according to figures from Nationwide.
This represents the weakest pace of growth since February 2013, according to chief economist Robert Gardner. He continued: “This marks a noticeable slowdown from previous months, where prices had been rising at a c2% pace. However, it is broadly in line with our expectations, since the start of the year we had been anticipating a price rise of c1% in 2018.
“Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchases, have remained broadly stable in recent months, but forward-looking indicators had suggested some softening was likely.
“In particular, measures of consumer confidence weakened in December and surveyors reported a further fall in new buyer enquiries towards the end of the year. While the number of properties coming onto the market also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers.
He added that the recent slowdown is probably attributable to the impact of the uncertain economic outlook on buyer sentiment, given that it has occurred against a backdrop of solid employment growth, stronger wage growth and continued low borrowing costs:
“Near term prospects will be heavily dependent on how quickly this uncertainty lifts, but ultimately the outlook for the housing market and house prices will be determined by the performance of the wider economy – especially the labour market.
“The economic outlook is unusually uncertain. However, if the economy continues to grow at a modest pace, with the unemployment rate and borrowing costs remaining close to current levels, we would expect UK house prices to rise at a low single-digit pace in 2019.
Mixed picture across the regions
“Amongst the home nations Northern Ireland recorded the strongest growth in 2018, with prices up 5.8%, though Wales also recorded a respectable 4% gain. By contrast, Scotland saw a more modest 0.9% increase, while England saw the smallest rise of just 0.7% over the year.”