UK house price growth remained subdued in February as Brexit continues to weigh on the market.
According to the Nationwide House Price Index, annual house price growth edged up by 0.4% in February - up from 0.1% the previous month.
On a monthly basis, house price growth fell by 0.1% in February, taking the average UK house price to £211,304.
Robert Gardner, Nationwide's chief economist, says: “Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, but survey data suggests that sentiment has softened.
“Measures of consumer confidence weakened around the turn of the year and surveyors reported a further fall in new buyer enquiries over the same period.
“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 in recent months.”
Jonathan Samuels, chief executive of property lender Octane Capital, says the UK property market remains “firmly on its knees”.
He says: “To say sentiment has softened is somewhat generous. Shattered is closer to the mark.
“March could be the month the property market finally succumbs to madness. The jobs market remains strong, inflation is below target and borrowing rates are low so seatbelts are at least buckled as we enter the turbulent months ahead.”
Brexit causes uncertainty
Economists expect Brexit will continue to have a significant impact on the market over the coming months.
Howard Archer, chief economic adviser at EY ITEM Club, says February marked “another weak performance” for house prices.
He warns that if the UK leaves the EU at the end of March without an approved Brexit deal, house prices could fall by up to 5% in 2019 amid heightened uncertainty and weakened economic activity.
Mr Archer says: “If Brexit is delayed, ongoing uncertainty is likely to weigh down on the housing market and could well see house prices stagnate or fall slightly. Much would depend on how long any UK exit from the EU is delayed and what happens then.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, says he does not expect the market to sink much lower.
He says: “Brexit uncertainty is prompting some potential homebuyers to delay purchases, but the pick-up in the UK Finance measure of mortgage approvals in January suggests the aggregate impact has been modest so far.”
Home ownership rises
Recent government data shows a rise in home ownership. The Ministry of Housing, Communities & Local Government says the home ownership rate in 2018 was 63.5% - up from 62.6% the previous year.
This was driven by an increase in the number of people owning their home with a mortgage - up by 5% over the year to 6.9 million.
The number of households owning their homes outright has risen by 1.2 million over the last decade to record high of 7.9 million, almost entirely amongst homeowners aged 65 or above, Nationwide says.
The biggest improvement in home ownership over the past year has been amongst those aged 35-44.
Mr Gardner adds: “Supportive labour market conditions and a number of policy changes, especially in the regulatory and tax system, have improved the bargaining position of home buyers relative to investors. Government schemes, such as Help To Buy equity loan, have also helped support first-time buyer numbers.”