On a monthly basis, house prices increased by 0.3% in September from -0.5% in August 2018, with an average house price standing at £214,922 compared to £214,745 last month, according to the Nationwide House Price Index.
Robert Gardner, Nationwide’s chief economist, said that subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low.
He added: “Overall, we continue to expect house prices to rise by around 1% over the course of 2018. Overall, UK house price growth remained broadly stable, but regional house price developments were more varied.
“For the fifth quarter in a row London prices fell in annual terms, though the decline remained modest at just -0.7%. Indeed, prices in the capital are only about 3% below the high recorded in Q1 2017 and are still more than 50% above their 2007 levels.
Southern England continued to see more subdued rates of growth.
Yorkshire and Humberside was the top performing region for the first time since 2005, with the annual price growth picking up to 5.8%.
Northern Ireland saw annual price growth strengthen to 4.3%. Wales saw a slight softening in growth, with prices up 3.3% year on year. Price growth also slowed in Scotland, from 3.1% in the second quarter to 2.1% in the third quarter.
On a regional basis, the outer Metropolitan area, London and the North all saw small year-on-year price falls, with the North the weakest performing region overall with prices down 1.7% year on year.
However, for the sixth successive quarter, price growth in Northern England exceeded that in Southern England. While the North saw price falls, other regions such as Yorkshire and Humberside and the North West saw price growth accelerate, meaning that overall prices in Northern England were up 4.1% year on year.
Building on green belt may help
Kevin Roberts, director of Legal & General Mortgage Club, said: “Modest house price growth is good news for many buyers, but for those looking to step onto the property ladder in London and the South East, the prospect of home ownership remains a distant reality.
“The Bank of Mum and Dad, which now accounts for one in every four housing transactions in the UK, is helping to fill this void – but what about those who don’t have this support to rely on? The obvious answer is to build more affordable homes. But it’s much more than that, it’s about thinking smarter too.
“Building on green belt land or relaxing planning regulations, for example, would help. With the Autumn budget fast approaching, we hope to see the Chancellor commit to genuine change and reform, if the Government is to remain true to its housing pledge.”
Craig McKinlay, new business director of Kensington Mortgages, said that fluctuations across the country are balancing out the overall shape of the market, yet many first-time buyers are still having to play catch up when attempting to step onto the property ladder.
He said: “On the other end of the spectrum, the cost of stamp duty for last-time buyers is preventing those further down the ladder moving into suitable properties. Add both of these problems to the lack of new supply – and prices will only continue one way.
“With the Autumn budget at the end of the month, the Chancellor has the perfect opportunity to introduce new legislation and combat our country’s long-term housing issues. In the meantime, however, those who are worried about affordability or how their own circumstances may limit their chances, getting in touch with a financial adviser is a good place to start.”
Brexit hits confidence
Jonathan Samuels, CEO of Octane Capital, said: “A strong jobs market and continued low borrowing rates are keeping transactions ticking over despite pressure on household finances, interest rate uncertainty and the ever-present threat that is Brexit.
“Few would bet against the market staying in the same supply/demand rut for the rest of the year and well into 2019. A chaotic Brexit has the potential to hit confidence and the property market for six.
“London will be in the firing line if Brexit sees international business and overseas investors steer clear. Over-exuberant house price growth from the recent past has made it even more vulnerable. The capital’s property market will bounce back but in the event of a chaotic Brexit it could bear the brunt of the pain.”