House price growth rises 1.4% in December

Annual UK house prices were 1.4% higher in December than in the same month in 2018, the first time house price growth had been above 1% for 12 months, according to the latest Nationwide House Price Index.

The Index suggested many indicators of UK economic activity were ‘fairly volatile’ for much of 2019, but that the underlying pace of growth had slowed through the year as a result of weaker global growth and an ‘intensification of Brexit uncertainty.’

Commenting on the figures, Nationwide chief economist, Robert Gardner, called any economic developments the ‘key driver of housing market trends and house prices.’

“Much will continue to depend on how quickly uncertainty about the UK’s future trading relationships lifts, as well as the outlook for global growth,” Gardner said.

“Overall, we expect the economy to continue to expand at a modest pace in 2020, with house prices remaining broadly flat over the next twelve months.”

Nationwide reported that first-time buyer numbers had continued to recover steadily and reached 354,400 in the twelve months to October – more than double the 155,000 recorded in 2009, but 12% below the 2006 peak.

The trend, the Index suggested, has been partly due to ‘robust labour market conditions,’ with the UK employment rate rising in recent years, and earnings growth also slowly improving.

“Low borrowing costs have also provided important support,” Gardner added. “Even though house prices remain high, relative to average incomes, the cost of servicing the typical mortgage as a share of take-home pay has remained close to or below long run averages in most parts of the country.

“The main exception is in London, where a period of rapid house price growth in the three years to 2015 means that monthly mortgage payments would also be unaffordable for a large proportion of the local population.

“But outside of London and the South-East, raising a deposit appears to be the main challenge for prospective first-time buyers.”

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