UK house prices fell 0.2% in September to an average of £274,251, according to Nationwide Building Society. The annual rate of price growth halved from 1.6% to 0.8% – the weakest since December last year.
Economic uncertainty blamed for slowdown
Robert Gardner, Nationwide's chief economist, said: “Market activity and house prices have remained subdued in recent months, in part reflecting the uncertain economic backdrop.
“Geopolitical tensions remain high, with the conflict in the Middle East exerting upward pressure on energy prices, fanning inflation concerns.”
Mr Gardner said, however, that the slowdown meant property prices were rising by much less than wage growth, boosting affordability.
Regional divide: East Anglia weakest, Northern Ireland strongest
Nationwide's data showed East Anglia was the weakest region, with prices down by an average 0.7% year-on-year in the past three months, to £272,119. The strongest part of the UK was Northern Ireland, with prices up 5.9% annually to £227,922. London remained the most expensive place to buy a home, with an average price of £529,720.
Terraced homes are proving the most in demand, with prices up 1.8%, whilst flats remained weakest, with prices essentially unchanged compared with a year ago.
Experts urge caution amid rising mortgage rates
Karen Noye, a mortgage expert at wealth manager Quilter, said: “These figures show that many would-be movers are taking a `wait-and-see' approach.
“Many buyers and sellers alike appear to be sitting on their hands as they wait for a clearer economic backdrop and a better understanding of the policy landscape ahead of Chancellor John Healey's first Budget.
“When purchasing a home is one of the biggest financial decisions a person will ever make, uncertainty over inflation, interest rates and potential policy changes can be enough to delay a move by weeks or even months.”
Sarah Coles, head of personal finance at broker AJ Bell, said: “Prices are now growing at their slowest pace since December last year, and are significantly lagging inflation. It means property is losing value once inflation is taken into account.
“It's easy to see why. Mortgage rates have been climbing since early August, forcing buyers to rethink their plans.”
Amy Reynolds, head of sales at London-based estate agency Antony Roberts, said: “We're seeing a sensible, needs-driven market: well-presented homes priced correctly are selling, and those pitched too hopefully are sitting.”
Nathan Emerson, chief executive at property professionals' body Propertymark, said: “Many consumers are taking a more cautious approach to their household finances, with affordability pressures continuing to influence decisions around buying and selling property.”
Tom Bill, head of UK residential research at Knight Frank, said: “House prices are stalling as the impact of rising mortgage rates takes its toll on demand, a pattern we expect to continue in the final three months of this year.”
Government scheme and market outlook
The Government recently announced a new first-time buyer scheme called Your First Home, which will give people in England a helping hand to buy a new build home. Further details about the initiative will be outlined in the Budget.
Simon Gerrard, chairman of Martyn Gerrard Estate Agents, said: “The housing market has been in desperate need of liquidity and it's good to see the Government take action to provide it.”
Nicky Stevenson, managing director of Fine & Country, said: “Nationwide's latest figures underline just how finely balanced the housing market remains. This is a market where buyer have more choice, and that means competition between sellers is particularly strong.”
Property prices by region (with quarterly change year-on-year): Northern Ireland, £227,922, 5.9%; North West, £231,360, 3.9%; Scotland, £196,215, 3.3%; North East, £174,731, 3.3%; Yorkshire and the Humber, £217,029, 1.2%; Wales, £214,816, 0.7%; West Midlands, £252,355, 0.6%; London, £529,720, 0.4%; Outer South East, £427,430, minus 0.2%; South West, £305,180, minus 0.3%; East Midlands, £237,449, minus 0.5%; East Anglia, £272,119, minus 0.7%.
