House prices grew by just 0.8 per cent in the 12 months leading to January, latest data from Halifax shows.
This leaves the average UK house price at £223,691.
On a monthly basis, prices dropped 2.9 per cent, which Halifax says is the second time in three years there has been a price fall at the start of the year.
This is a marked difference to last month, when the lender recorded annual growth of 1.3 per cent and monthly of 2.5 per cent (revised from 2.2 per cent).
Halifax manging director Russell Galley comments: “Attention will no doubt be drawn towards the monthly fall… the second time in three years that we have seen a drop as a new year starts. However, the bigger picture is actually that house prices have seen next to no movement over the last year.”
He says that the lender expects price growth to be subdued in the near term, citing constrained supply that is supporting price levels and a combination of healthy economic indicators and cheap borrowing costs powering the demand side, which, Galley says, are more fundamental than any Brexit impact.
However, Garrington Property Finders managing director Jonathan Hopper points the finger firmly at the UK’s impending exit from the EU. “The confidence-sapping uncertainty of Brexit it getting worse, not better, and the next few months will be decisive. Barring an improbable Brexit solution that magically avoids both economic and political turmoil, a return to universally rising prices appears unlikely any time soon.”
James Pendleton director Lucy Pendleton adds that “the rarefied air of political uncertainty and low supply is sending the market into a bit of a spin.
“The long-term holding pattern in prices ahead of Brexit is abundantly clear and overall measures of consumer confidence have been scraping five-year lows. However, if the UK does enjoy a good EU exit, then a relief rally could be in store given the plentiful government support for buyers, cheap borrowing and rising wages coupled with low supply.”
Meanwhile, SPF Private Clients chief executive Mark Harris says: “Fewer transactions has meant less business for lenders, yet they remain keen to lend. They run big operations and need their staff to be busy, so have two options – change their risk profile or mortgage pricing. The latter is easier, which is why many lenders have reduced their mortgage rates, and is great news for borrowers who are ready to make a move.
“The result is a reduction in mortgage rates across the board – and no signs that this situation will change anytime soon.”
The Guild of Property Professionals chief executive Iain McKenzie strikes a positive tone, too: “These latest figures prove that the housing market remains remarkably resilient.
“Even during a period of poor sentiment from homeowners, house prices have increased over the last year, albeit at a slower rate. Home ownership is the bed rock of our society and will remain so for the foreseeable future,” he says.