UK house price growth remained flat in June as Brexit uncertainty continues to hamper the market.
Annual house prices rose by just 0.5% in June – down from 0.6% the previous month, according to the latest Nationwide House Price Index.
On a monthly basis, house price growth rose by 0.1% in June, taking the average UK house price to £216,515.
This is now the seventh month in a row in which annual house price growth has remained below 1%.
Robert Gardner, Nationwide's chief economist, says that while political uncertainty continues to affect the market, wage growth and low interest rates were supporting demand.
He says: “Survey data suggests that new buyer enquiries and consumer confidence have remained subdued in recent months. Nevertheless, indicators of housing market activity, such as the number of mortgages approved for house purchase, have remained broadly stable.
“Housing market trends are likely to continue to mirror developments in the broader economy. While healthy labour market conditions and low borrowing costs will provide underlying support, uncertainty is likely to continue to act as a drag on sentiment and activity, with price growth and transaction levels remaining close to current levels over the coming months.”
North-South divide narrows
A slowdown in growth in London and the South East where affordability pressures are at their highest has helped drive down overall house prices.
The prices in London fell for the eighth quarter in a row, though the annual pace of decline moderated to from 3.8% to 0.7% in the last quarter.
Prices in the capital are around 5% below the all-time highs recorded in early 2017 and 50% above their 2007 levels before the financial crisis. By comparison, UK prices are only around 17% higher over the same period.
The commuter belt outside of London was the weakest performing region in the three months to June, closely followed by the South East, with annual price declines of 1.8% and 1.6% respectively.
The North-South house price divide continues to narrow. House price growth across northern England averaged 2.1%, remaining ahead of that in the south which experienced a 0.7% fall.
Nationwide says this is not entirely unexpected following several years of sustained outperformance in London and the south, which has left affordability more stretched in these areas.
With Brexit delayed until the end of October, the threat of a no deal is set to weigh on the market with little change in prices over the coming months, experts warn.
Andrew Montlake, director of mortgage broker Coreco, says: “The impact of political events on sentiment has been palpable in recent weeks and this is reflected in the June house price index.
“In April and May, there was a renewed vigour among buyers and sellers alike as the 29 March Brexit deadline passed.
“In June, demand dropped off again following the resignation of Theresa May and the increased likelihood of a no-deal Brexit.
“There’s without doubt a degree of Brexit apathy out there driving transactions but no deal is increasingly at the back of people’s minds.”
Howard Archer, chief economic adviser at the EY Item Club, says: “We believe, with Brexit being delayed until 31 October – and it currently very unclear what will happen then – and the domestic UK political situation unsettled, prolonged uncertainty will weigh down on the economy and hamper the housing market.
“Consumers may well be particularly cautious about committing to buying a house, especially as house prices are relatively expensive relative to incomes.”
"Flat" house price growth
Why do commentators predominantly fret about "flat" housing transactions. Housing is a roof over one's head, not a privileged monetary consideration - from a home owner of half a century.