UK house price growth at five-year low, official figures show

Land Registry figures revealed average UK house prices increased 3.0% for June, the lowest annual rate since August 2013.

The house price index beat the estimated 2.6% but was down from May's figure, which was revised up to 3.5%.

Annual growth in house prices has slowed since mid-2016 and has remained under 5%, with the exception of October 2017, throughout 2017 and into 2018.

Slowing in UK house price growth over the past two years is driven mainly by a slowdown in the south and east of England, the Office for National Statistics said. The lowest annual growth was in London, where prices decreased by 0.7% over the year, down from negative 0.2%.

The index includes all residential properties purchased for market value in the UK but the ONS warned that, as sales only appear in the index once the purchases have been registered, there can be a delay before transactions feed into the index. "As such, caution is advised when interpreting price changes in the most recent periods as they can be revised."

Mike Scott, property analyst at estate agent Yopa, said the government’s official data confirms the price slowdown seen in other surveys and with inflation increasing to 2.5%, house price growth is barely ahead of that rate, and other reports which measure prices earlier in the home-selling process indicate that it is likely to fall further in the next few months.

"The outlook for next year is still very uncertain, as no one yet knows what will happen after 29 March - the date for Brexit," Scott said. "The number of buyers in the market is flat, while the number of new sellers has increased slightly, so estate agents’ stock has also gone up a little. The number of house sales is a bit lower than it was at the same time last year. However, mortgage approvals are starting to turn up again, indicating that buyer numbers are likely to recover by the end of the year. We do not expect prices to turn negative as long as they are being propped up by low unemployment, low mortgage interest rates and limited supply."

Jonathan Samuels, CEO of property lender Octane Capital, noted that the annual growth rate in London is at its lowest level since September 2009, going from hero to below zero in a matter of a few years and now similar to the North East as a stark reminder of how volatile the UK property market can be in the short term.

"There's a widespread caution in the property market at present, caused by the uncertainty of Brexit and the ongoing squeeze on household income, as revealed by the latest July inflation data," he said. "Households are wary of taking on more debt, all the more so following the recent interest rate rise, which could further undermine sentiment. The jobs market might be holding up but if inflation maintains its grip on UK households, it's hard to see much improvement in the UK property market during the rest of the year. As for 2019, a no-deal Brexit could wreak further havoc amid UK bricks and mortar."