House prices rose at their slowest pace for nearly six years in December, according to Nationwide’s latest house price index, with ongoing Brexit uncertainty taking its toll.
Prices in December 2018 were up just 0.5% compared to the same month a year earlier, the building society said. The average property price in the UK now stands at £212,281.
Despite current economic uncertainty, Nationwide expects house prices to rise at a ‘low single-digit pace in 2019’, helped by a low unemployment rate and cheap mortgage costs.
Brexit and economic uncertainty are the main headwinds facing the housing market in 2019, but a shortage of homes for sale and low levels of housebuilding should continue to support prices.
According to Halifax, house prices should rise by between 2% and 4% in 2019, although this is dependent on the Brexit outcome.
Russell Galley, managing director at Halifax, said: “Looking ahead, aside from the obvious political and economic uncertainty, the biggest issue for the housing market in 2019 will be the degree to which mortgage payment affordability changes. Average pay growth is likely to gather pace but, with a further interest rate increase also predicted, house prices are unlikely to be pushed significantly in either direction.”
Halifax’s 2%-4% forecast contrasts with that of the Royal Institution of Chartered Surveyors (RICS). RICS says that national house price growth is likely to come to a standstill by mid-2019, although a lack of supply should help prevent any outright falls in prices.
Tarrant Parsons, RICS economist said: "It's not all bad news for the outlook however, as sentiment could be lifted if a deal were to be reached on the withdrawal agreement before too long. Furthermore, mortgage rates are set to remain favourable, with any changes in monetary policy expected to be minimal over the next twelve months."
The highest house price growth in 2019 is likely to continue to be outside London and the South East.
According to Nationwide, the top-performing region in 2018 was Northern Ireland, where prices rose 5.8% over the year. Wales also performed well, with prices up 4% in 2018. Price growth in Scotland was more subdued, rising by 0.9% over the year, whilst prices in England were up just 0.7% over the year.
Prices in northern England were up 3% year-on-year, but in the south prices fell by 0.2%. However, relative to 2007 peaks, prices in the north remain close to 2007 levels, whereas in London they are more than 50% higher.
What will happen to house prices in 2019?