Uncertainty continues to be a drag on the market, but price growth is strong in Wales, Scotland and the Midlands
House prices remained flat in August to leave annual growth at 0.6%, according to Nationwide. We now expect average house price growth to be flat in 2019, down from the prediction of 1.5% growth we made last November. That prediction had been under the assumption of an orderly Brexit earlier in the year.
The impact on the housing market of the delayed return to greater economic and political certainty is becoming increasingly clear. As Conservative leadership candidates jostled for position through June and July, the reduction in housing transaction numbers gained pace again after a period of slower falls in April and May. This resulted in the weakest June since 2013, and the first June to see fewer transactions than the preceding May since 2008. The RICS Survey for July gave some hope that activity levels may pick up. A small majority of surveyors reported increased buyer enquiries in July, but almost equal numbers of surveyors reported increases as decreases in the number of instructions. Uncertainty has only increased since then and will continue to shape the market until the Brexit impasse is resolved.
It’s tempting to blame Brexit uncertainly for the price falls in London and the South East. But the geographic distribution of price movements around the national average follows a trend observed in previous housing market cycles. After a period of growth above the national average in London and the South, there follows a period during which the rest of the country plays catch-up. Over the last year, nine of the top ten highest price growth local authorities were in Wales or Scotland. They were led by Blaenau Gwent and West Dunbartonshire, at 17.9% and 11.6% annual growth respectively. London was the weakest region, containing six of the bottom ten local authorities for price growth. House prices were down 7.2% in Westminster and 5.8% in South Bucks.