House prices in the UK grew at their lowest rate for five years in October against a backdrop of squeezed finances and an uncertain economic outlook.
Nationwide’s latest monthly house price index showed annual house price growth for October was 1.6 per cent, down from 2 per cent in September. This was the slowest rate of growth measured by the index since May 2013.
The average house price now stands at £214,534, with month-on-month prices remaining flat after accounting for seasonal effects.
Activity in the market was also subdued, with 1.2 million transactions in the 12 months to September 2018, down by 30 per cent on the same period in 2007, when sales peaked.
Meanwhile, the UK cities house price index from Housetrack, which follows market trends in 20 cities, showed price growth had eased to 3.2 per cent in September from 3.8 per cent one year ago.
Prices in London fell by 0.4 per cent year on year, while Liverpool recorded strong growth of 6.9 per cent. Crucially, 54 per cent of London postcodes registered annual price falls.
Robert Gardner, chief economist at Nationwide, said the slowdown in growth was in line with expectations.
He said: "The squeeze on household budgets and the uncertain economic outlook is likely to have dampened demand, even though borrowing costs remain low by historic standards and unemployment is at 40-year lows. We continue to expect house prices to rise by around 1 per cent over the course of 2018."
Ross Boyd, founder of mortgage platform Dashly, said: "As we enter the business end of Brexit, households are getting ever more apprehensive and this is now materially affecting demand.
"It’s hard to see the property market emerging from its current stasis until well into 2019, once there is more clarity on where the economy is at."
Meanwhile, Sam Mitchell, chief executive of Housesimple.com, said this week's Budget was a missed opportunity for the housing market.
He said: "The chancellor had an opportunity on Monday to provide an immediate stimulus to a housing market struggling to get out of first gear, but Mr Scrooge clearly wasn't in the mood to hand out early Christmas presents.
"What the market really needed was a strong statement of intent from the government; reversing the punitive buy-to-let tax regime and cutting stamp duty for downsizers would have done that. Unfortunately, neither materialised, and the market now heads into the winter period without much momentum."
The Chancellor delivered mixed messages for property investors in Monday's speech, delivering a blow to buy-to-let investors and good news to first time buyers.
From April 2020 the government will reform lettings relief so that it only applies in circumstances where the owner of the property is in shared occupancy with the tenant.
But tucked away in the 281-page review documentation accompanying the Budget was a single sentence confirming a HM Treasury U-turn.
HM Treasury scrapped a shared occupancy test for those renting their spare rooms to continue to qualify for the annual £7,500 rent-a-room tax relief.
In good news for first time buyers, the Help to Buy equity loan scheme was extended by two years, now running until 2023 rather than 2021.
