Experts warn that prices could drop as much as 5% in the event of a no-deal Brexit
UK house price growth is at its lowest since January as buyers and sellers remain cautious amid Brexit uncertainty.
House prices rose just 0.2% in September, according to data from the Nationwide House Price Index, the tenth month in a row in which annual price growth has been below 1%.
On a monthly basis, house price growth fell by 0.2%, taking the average UK house price to £215,352.
Robert Gardner, Nationwide's chief economist, says: “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.
“However, the slowdown has centred on business investment – household spending has been more resilient, supported by steady gains in employment and real earnings.
“The underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years.
"Healthy labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook.”
London hardest hit
Northern Ireland was the strongest performing region with annual price growth of 3.4%. It was followed by Wales with 2.9% growth and the North West where prices rose by 2.5%.
The largest price falls were in London and its surrounding area, where prices dropped 1.7%.
House price growth across northern England slowed to 1.4%, but remained ahead of that in the south, which experienced a 0.8% fall.
Mr Gardner says: “These trends are not entirely unexpected, however, as affordability is still more stretched in the south, with prices further above their pre-financial crisis levels, as shown below.”
The UK housing market was hit hard following the EU referendum, with prices falling in some regions such as London and the South East.
Prime Minister Boris Johnson insists Britain will leave the EU on 31 October, even if a deal has not been struck with the EU. However, Parliament has passed a law blocking the UK leaving the EU without a deal.
Howard Archer, chief economic adviser to the EY Item group, warns that if the UK leaves the EU without a deal on 31 October house prices could quickly drop by around 5%.
However he adds: “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% 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.”