The latest official figures confirm that house price growth is slowing across the UK, with Scotland recording the strongest rise in the country.
On average house prices increased by 0.1% in May month on month to £226,351 and were up 3% compared to the same month in 2017, but this was a fall from the 3.5% annual rate recorded in April 2018.
In Scotland prices increased by 4.9% in the 12 months to May 2018, while they increased 2.9% in England and 1% in Wales. In Northern Ireland, which publishes data on a quarterly basis, prices were up 4.2% in the 12 months to the end of March 2018.
The average price of a home in Scotland is now £149,004 and values were up 0.1% month on month. The biggest annual growth was in West Dunbartonshire with a rise of 12.9% followed by Edinburgh 9.9%. But sales were down on an annual basis by 16.1%.
The data from the Land Registry also shows that in Wales house prices have fallen by 3% since April 2018 to an average of £148,894 and the most up to date figures reveal that sales in Wales fell by 13.8% year on year to the end of March.
In England the biggest monthly prices rise was in the East Midlands with growth of 1.7% while the North East saw the most significant monthly price fall, down by 0.5% and London saw the lowest annual price increase, down by 0.4% to an average of £478,853.
Sales in England fell by 21.8% compared with March 2017 and in London they were down by 28.6% year on year.
The slowing price growth is a direct consequence of a fall in buyer enquiries and sales, and this has been driven by a lack of homes for sale, according to Russell Quirk, chief executive officer of hybrid estate agent Emoov.
But he believes it will pick up. ‘We are starting to see market activity heighten on the supply side and it won’t be long before this filters through to potential buyers. Once buyer interest overtakes the stock available, price growth will inevitably pick up the pace and return to previous levels,’ he said.
‘This is already apparent in some areas and it isn’t just in areas with a more affordable price tag. Hyndburn, Wyre Forest and Inverclyde are seeing some of the strongest price growth month on month, they’re joined by Stratford-upon-Avon, Rutland and Tower Hamlets where the average price tag is well over £300,000,’ he pointed out.
‘In addition, while annual price growth as a whole may have slumped to just 3%, there are a wealth of areas the length and breadth of the UK enjoying double digit price growth on an annual basis,’ he added.
Jonathan Samuels, chief executive officer of property lender Octane Capital, pointed out that it should be noted that the South East and London are a drag on the national figure, bringing prices down overall to a five year low and he thinks the current gloom about Brexit is dampening the appetite for moving.
‘For many people, a time of absolute political turmoil is not the ideal time to transact. The one upside is that a time of such uncertainty always creates opportunity for savvier property investors. While owner occupiers might be lying low, developers and professional property investors are increasingly active,’ he said.
It should be remembered that there are considerable regional variations when it comes to pries, according to Alan Collett, fund manager at Hearthstone Investments. ‘Homes in the Midlands continuing to enjoy rising valuations, while properties in London are facing downward pressure on price. Yet even in London there are areas with rising prices and these local variations between different towns and suburbs within the regional variations can provide opportunities for investment buyers who fully research the market,’ he explained.
But Jonathan Hopper, managing director of Garrington Property Finders, also thinks that there is now a Brexit effect. ‘The Government’s increasing fragility and the paralysis in Britain’s Brexit negotiations will do little to instil confidence,’ he said.
But he thinks that improving affordability is steadily putting home ownership within reach for more people. ‘Softening prices, rising wages and the fast approaching prospect of an interest rate rise continue to nudge many would-be buyers into making their move,’ he added.