End of year index figures show outlook for property price growth in UK is modest
Property prices in the UK increased by 0.2% in December and ended the year up 2.6% on an annual basis, less than the 4.5% recorded at the end of 2016, the latest index data shows.
London has been the weakest performing region, with house prices down 0.5% year on year and overall there are significant differences in regional affordability, but saving for a deposit remains challenging for most, says the index report from lender the Nationwide.
Robert Gardner, Nationwide’s chief economist, pointed out that annual house price growth was within the 2% to 4% range throughout 2017 which was in line with expectations and broadly consistent with the 3% to 4% annual rate of increase expected over the long term.
‘However, this marked a modest slowdown from the 4% to 6% rates of house price growth recorded in 2016. Low mortgage rates and healthy employment growth continued to support demand in 2017, while supply constraints provided support for house prices. But this was offset by mounting pressure on household incomes, which exerted an increasing drag on consumer confidence as the year progressed,’ Gardner said.
‘The impact of previous policy changes, including additional stamp duty on second homes, changes to tax deductibility of landlord expenses and lending criteria, meant that demand from buy to let investors remained subdued in 2017,’ he explained.
‘The significant disparity in house prices across the UK has been a recurring theme in recent years. In this respect, 2017 saw the beginnings of a shift, as rates of house price growth in the south of England moderated towards those prevailing in the rest of the country,’ he added.
He pointed out that London saw a particularly marked slowdown, with prices falling in annual terms for the first time in eight years, albeit by a modest 0.5%. ‘London ended the year the weakest performing region for the first time since 2004,’ Gardner added.