House prices fall for first time in seven years, dragged down by London property slump

29 March 2019

England has recorded its first annual house price fall since 2012, driven by declines in London and the South East, new figures show.

According to the Nationwide House Price Index, house prices in England were down 0.7% in the first three months compared to the same time a year ago.

London was the poorest performing region in the first quarter with prices falling annually by 3.8% - the biggest fall since 2009. This is the seventh consecutive quarter in which prices have dropped in the capital.

Nationwide says the fall in the capital is a result of several years of unaffordable house prices and tax changes which have affected the buy-to-let market.

Annual house price growth rose by 0.7% in March - up from 0.4% the previous month.

On a monthly basis, house price growth rose slightly by 0.2%, taking the average UK house price to £213,304.

Northern Ireland, Scotland and Wales all recorded house price growth above the UK average.

Property experts have blamed the slowdown in the property market on Brexit uncertainty.

Howard Archer, chief economic adviser at EY ITEM Club, says: “The housing market is currently being hampered by challenging conditions with buyer caution currently being reinforced by heightened Brexit and economic uncertainties – although there are significant variations across regions with the overall picture being dragged down by the weakness in London and the South East.

“With Brexit now set to be delayed until sometime in the second quarter – or conceivably later - further uncertainty is likely to weigh on the housing market in the near term at least. This has caused us to trim our forecast for house price growth over 2019 to just 1%.”

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, even though survey data suggests that sentiment has softened.

“Measures of consumer confidence weakened around the turn of the year and surveyors report that new buyer enquiries have continued to decline, falling to their lowest level since 2008 in February.

“While the number of properties coming onto the market has 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.” 

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