Annual house price growth across the UK remained below 1 per cent for the sixth consecutive month in May, latest data from Nationwide has shown.
According to the lender's house price index, published today (May 31), the average cost of a house sat at £214,956 — up 0.6 per cent on the same month last year, which was a slight slowdown on the 0.9 per cent year-on-year growth measured in April 2019.
The slowdown followed an already subdued market in which growth has remained below 1 per cent since November 2018.
By comparison, growth consistently stayed above 2 per cent — peaking to 3.1 per cent in June 2017 — in the 16 months up to September last year.
However Robert Gardner, Nationwide’s chief economist, said indicators of housing market activity — such as the number of property transactions and the number of mortgage approvals — had remained broadly steady.
He added: "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."
The index also showed first-time buyer numbers had continued to steadily recover, reaching 359,000 in the year to March — just 10 per cent below 2006 peaks.
According to Mr Gardner, low borrowing costs, labour market conditions and a rise in employment had underpinned the growing numbers.
These factors meant the cost of servicing a typical mortgage as a share of take home pay had remained close to or below long run averages in most parts of the country.
But it was raising the deposit for a home that remained the real challenge for most prospective first-time buyers, according to the index, although the time needed to save differed per region.
Even in Scotland and the north, where property is most affordable, it would take someone earning the average wage and saving 15 per cent of their take home pay each month more than five years to save a 20 per cent deposit.
This timeframe jumped to seven years in Wales and Northern Ireland, more than 10 in the south east and up to 15 years in the capital.
Mr Gardner said this had led to a growing proportion of first-time buyers drawing on help from friends and family or an inheritance to raise a deposit.
He said: "In 2017/18 almost half of first time buyers had some help raising a deposit, either in the form of a gift or loan from family, friends or through inheritance, up from around a quarter in the mid-1990s and 35 per cent of buyers in 2015/16.
"The government’s Help to Buy equity loan scheme has also been an important source of support for first time buyers by easing deposit constraints," he added.
In fact the Help to Buy scheme accounted for 14 per cent of all first-time buyer transactions in England.
But fears are growing that the housing market has become too reliant on Help to Buy as research showed the scheme has funded up to 97 per cent of new build sales in some regions.
The government-backed scheme is set to close in 2023 with restrictions tightening its usage from 2021.
Jonathan Hopper, managing director of Garrington Property Finders, said this year’s spring boost to prices had wilted "faster than a bunch of daffodils.
"But on the front line we’re seeing activity levels blossom – and May has been our busiest month of the year so far."
He added: "Three years on from the EU referendum, months of political limbo could still lie ahead for the UK.
"Yet for some astute and tactical buyers, that uncertainty is providing the perfect opportunity to make aggressive offers and secure some big discounts."
Craig McKinlay, new business director at Kensington Mortgages, said Nationwide’s data showed the UK housing market was stagnating.
He added: "Whilst the number of first-time buyers has continued to increase steadily, helped by low borrowing costs and a slowdown in prices, people are still being cautious as economic and political uncertainty bites."
Jonathan Samuels, chief executive of the property lender Octane Capital, warned that prices could fall further over the summer as a no-deal exit once again becomes a real possibility.
He said: "Prices are usually buoyant at this time of the year but the gravity of political events has brushed any seasonal uplift aside. Amid the political uncertainty, there is a growing realpolitik among buyers.
"Transaction levels are hardly robust but people are increasingly starting to make their move.
"Despite the chaotic political backdrop, mortgage rates are ultra-competitive, the jobs market strong and Help to Buy is proving a real hit with first-time buyers.
"It's a buyers' market and more and more people are making the most of it. If it weren't for anaemic stock levels, transaction levels would be higher as people get on with their lives."
imogen.tew@ft.com
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