UK house prices fell unexpectedly in September amid intensifying Brexit uncertainty
London and South East England continue to see sharpest declines as EU departure deadline looms
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Your support makes all the difference.House prices fell unexpectedly in September as uncertainty around Brexit dampened activity, according to Nationwide’s index.
The building society recorded a 0.2 per cent fall from a month earlier, below a 0.1 per cent rise forecast in a Reuters poll of analysts.
Compared with September last year, the average house price across the UK rose by 0.2 per cent to £215,352. But quarterly measures in Nationwide’s report reveal significant regional variations.
Northern Ireland remained the strongest-performing home nation in the July-September period, though annual price growth moderated to 3.4 per cent from 5.2 per cent in the second quarter.
Wales also recorded a slowdown to 2.9 per cent, from 4.2 per cent in the April-June period. Annual price growth in Scotland remained subdued at 0.8 per cent, up slightly from 0.4 per cent.
London and the South East of England remained the worst-performing areas. Average prices in the capital slumped 1.7 per cent in the quarter, while in the outer metropolitan region, which includes London commuter towns, prices dropped 1.5 per cent.
London has now gone through nine successive quarters of falling prices. However, the average price remains around 50 per cent higher than at its 2007 peak. Across England, average prices are more than 25 per cent higher on the same measure, with affordability poor for many buyers.
Robert Gardner, Nationwide's chief economist, said the effects of Brexit are weighing on Britain’s housing market.
“Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensification of Brexit uncertainty,” he said.
Latest data from Halifax put annual house price inflation significantly higher than Nationwide, at 1.8 per cent in August, while the Land Registry put it at 0.7 per cent in July.
Looking ahead, Howard Archer, chief UK economist of the EY Item Club, said clouds over the economy may restrict the housing market.
“It is questionable whether the labour market can extend its recent improvement as companies face a soft domestic economy, heightened Brexit uncertainties, an unsettled domestic political situation and a challenging global environment,” he said.
“Our suspicion is that earnings growth may well have peaked in the three months to July, while employment growth slowed appreciably in the three months to June.
“Should the UK leave the EU with a deal at the end of October – or early in 2020 – we believe reduced uncertainty and gradually improving economic activity as the year progresses could see house prices rise by around 2 per cent over 2020.
“Housing market activity – and possibly to a lesser extent prices - could be given a lift in 2020 if the government cuts stamp duty significantly in the budget later this year.”
A no-deal Brexit would wipe 5 per cent of average house prices, Mr Archer forecasts.
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