UK house price growth picked up in November, but the market remains subdued as an uncertain economy and the squeeze on household budgets continue to dampen demand.
According to the Nationwide House Price Index, annual house price growth edged up slightly by 1.9% in November - up from 1.6% the previous month.
On a monthly basis house price growth rose from 0% in October to 0.3%, taking the average UK house price to £214,044.
Robert Gardner, Nationwide Building Society's chief economist, explains the situation: “Looking forward, much will depend on how broader economic conditions evolve.
"In the near term, the squeeze on household budgets and the uncertain economic outlook is likely to continue to dampen demand, even though borrowing costs remain low and the unemployment rate is near 40-year lows.”
He adds: “If the uncertainty lifts in the months ahead and employment continues to rise, there is scope for activity to pick-up through next year.
"The squeeze on household incomes is already moderating and policymakers have signalled that, if the economy performs as they expect, interest rates are only expected to rise at a modest pace and to a limited extent in the years ahead.”
- UK house prices fall by more than £5,000 with sharpest falls in the South, as sellers lower expectations
The Bank of England’s governor Mark Carney repeated warnings earlier this week that in the worst-case scenario a no-deal Brexit could spark an economic crash that could see house prices plummet by up to 30%. Mr Carney first gave a warning over house prices in September.
Howard Archer, chief economic adviser to the EY Item group, says the housing market is likely to remain sluggish in the coming months with prices being dragged down by the poorly performing London market and parts of the South East.
But Mr Archer believes that if the UK leaves the EU in March without a deal, house prices “may fall modestly” in 2019.
Mr Archer says: “The fundamentals for house buyers are likely to remain challenging. Consumers have faced an extended serious squeeze on purchasing power, which is only gradually easing.
"Additionally, housing market activity remains hampered by relatively fragile consumer confidence and a limited willingness to engage in major transactions.”
He adds: “Caution over making major purchases may well be magnified by current heightened uncertainties over Brexit. House buyers may also be concerned about further interest rate hikes over the coming months – even if they are likely to be gradual and limited."