Steep declines in London and south as weak wage growth still cuts out younger buyers
House prices in Britain are rising at the slowest annual rate for seven years as Brexit uncertainty dampens consumer demand.
Dragged down by steep declines in London and the south, national house price growth for the country at large dropped to 0.7% in July from 1.4% a month earlier, hitting the slowest growth rate since 2012, said the Office for National Statistics.
House prices fell in four of nine English regions, with the biggest decline in the north-east where the average cost of a home slid by 2.9% over the year. The average property price for the country at large increased over the year by £2,000 to stand at £233,000 in July.
The north-east remains the cheapest place to buy a home, at £127,000, and is the only region of Britain where prices have yet to rise above the level recorded before the 2008 financial crisis hit.
In a sign of Brexit political chaos discouraging buyers and sellers, there has been a general slowdown in UK house price growth over the three years since the EU referendum, driven mainly by a slowdown in the south and east of England.
Property values also remain high compared to earnings, after a decade of weak wage growth for British workers, making it increasingly tough for younger buyers to get on the property ladder.
Economists said the fall in house prices could come as welcome news for first-time buyers, although they warned that the gap between prices and earnings remained large.
Although prices dropped in London for the 17th month in a row, sliding by 1.4% in the year to July, the capital stayed the most expensive place in the UK for purchases, with an average house price of £478,000.
Analysts at the Resolution Foundation thinktank said: “Since early 2011 house prices have increased six times faster than earnings in the capital. Home ownership in London remains far out of reach for many families.”
The capital and surrounding areas are most affected by Brexit uncertainty, according to analysts, who have warned that prices are likely to continue to fall or rise slowly until the uncertainty subsides.
Richard Donnell, research and insight director for the property website Zoopla, said: “The reality is that buyers are simply being more cautious and this has reduced the impetus for house-price growth. Weaker levels of house-price growth are set to be a feature of the market for the rest of this year and the first half of 2020 at least.”
Shares in UK house builders sold-off sharply on Wednesday after the release of the ONS data, following losses on Tuesday after the release of a critical report on the government’s help to buy scheme. Persimmon and Taylor Wimpey tumbled by more than 2%.
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