UK house price growth drops to five-year low

UK house price growth drops to five-year low

Annual house price growth in July dropped to its lowest rate in five years, the Office for National Statistics (ONS) reported today (19 September).

The ONS house price index showed average house prices in the UK increased by 3.1 per cent in the year to July - a slight drop on June's rate of 3.2 per cent and the lowest level since August 2013.

The latest figures conform with the wider trajectory of house price growth in recent years, which has slowed since mid-2016 and remained below a rate of 5 per cent.

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The price index found the stall in growth over the past two years has been largely driven by a slowdown in the south and east of England - with the lowest annual growth reported in London this year, as prices dropped 0.7 per cent.

Despite the regional slowdown in growth, London's average house price remained the highest in the UK at £485,000 in July - compared with the lowest average price recorded in the north east at £132,000.

Overall, July's average UK house price was £231,000 - £6,000 more than the same month last year and an increase of £2,000 since June 2018.

The house price index is an accumulation between the HM Land Registry, Land and Property Services Northern Ireland, Office for National Statistics and Registers of Scotland. 

Steve Seal, director of sales and marketing at Bluestone Mortgages, said while it is fortunate that house prices are not rising rapidly like they used to, the cost of living continues to increase.

He said: "Many borrowers feel their chances of achieving homeownership shrink by the day - when you consider this daily strain, it is understandable why some potential borrowers may accidentally go into the red when an unexpected life blip occurs.

"In light of this, it is vital that specialist lenders continue to provide support for this growing pool of borrowers where high-street lenders may otherwise be unable to - taking the time to understand their financial background on a case-by-case basis."

Kevin Roberts, director at Legal & General Mortgage Club, said that despite steadier year-on-year house price growth, first-time buyers are still having to dig deeper to save for a deposit.

He said: "First-time buyers in London need to raise three times the amount required than in 2008.

"A lack of appropriate housing stock is creating a bottleneck in the market - it is limiting options available to those looking to take their first or next step onto the ladder, as well as squeezing affordability."

Mr Roberts said more homes are needed with solving the housing crisis posing a  long-term challenge.

He said: "We need the government to deliver on the target of building 300,000 new homes each year- without delivering these much needed homes, homeownership will remain a dream for thousands of borrowers, rather than reality."