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Nationwide research shows pace of growth slowing, but Northern Ireland bucks the trend

Friday 04 January 2019

Nationwide's latest House Price Index shows that annual house price growth has slowed to an average of just 0.5 per cent across the UK. However, there have been some pockets of the UK which have bucked the trend, such as Northern Ireland, where house prices increased by an average of 5.8 per cent.

What is also apparent, and has been for some time now, is that the glory days of London property prices seem to be largely coming to an end, as the scale of balance begins to tip back towards the North. Nationwide figures show that London prices have dropped by 0.8 per cent over the course of 2018. As a combined figure, London and the surrounding regions showed at best a 'no change' in property prices, and at worst, a decrease of up anything up to five per cent. However, this will be of little comfort to those in the South trying to get on the housing ladder, with prices remaining significantly higher than those in the North - £329,240, compared to £166,642 respectively. 

Yorkshire and Humberside, and the East Midlands both put in a strong performances for English regions, with prices showing an annual increase of 5.8 per cent and 4.8 per cent respectively. The East Midlands also showed the biggest increase for quarter four of 2018. But whilst things are generally looking up for the North, looking at price levels relative to 2007 peaks, there is a still a significant divide. In Yorkshire and Humberside, the North West and North prices are still close to 2007 levels, while in London they are more than 50 per cent higher.

In terms of countries, Northern Ireland tops the table, showing an annual increase of 5.8 per cent, followed closely by Wales with an increase of four per cent, with Scotland and England some way behind at 0.9 per cent and 0.7 per cent respectively. The average house price across the UK for 2018 was £214,178. Unfortunately the Nationwide House Price Index does not break down Wales, Northern Ireland or Scotland into regions within the country borders, meaning that a more macro level analysis if not possible. However, the Citylets quarterly reports provide a good insight into the Scottish market. 

Robert Gardner, Nationwide's Chief Economist, said: “UK house price growth slowed noticeably as 2018 drew to a close, with prices just 0.5 per cent higher than December 2017. This marks a noticeable slowdown from previous months, where prices had been rising at a circa two per cent pace. However, it is broadly in line with our expectations (since the start of the year we had been anticipating a price rise of circa one per cent 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.”

The outlook for 2019

Referring to the UK's economic future and uncertainty surrounding Brexit, Gardner said: “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.”

View the full report