House prices slump £6k in a month and rose only 0.8% in 2018, latest index finds

Property prices have seen ‘next to no movement’ in the past year according to the latest Halifax house price index, which also revealed the second largest monthly drop in values since September 2010. 

Across the country, annual price growth slowed from 1.3 per cent in December to 0.8 per cent in January, one of Britain’s biggest lenders says. 

Property values tumbled 2.9 per cent on a monthly basis in January, reversing a surprisingly strong 2.5 per cent increase in December that had the bank’s managing director predicting house price growth of as high as four per cent this year.

Down: House prices have dropped £6,000 in a month, Halifax data shows

The average house price now stands at £223,691, more than £6,000 lower than December, meaning prices have now fallen in four months out of the last six. 

However, December did see 102,330 home sales, which means 100,000 homes or more have now been sold for the fourth consecutive month.

Halifax’s rival Nationwide found in its own index at the end of last month that house prices inched up just 0.1 per cent in the year to January 2019.

Revising his bold projection from last month, Russell Galley, managing director at Halifax, said price growth is now expected ‘to remain subdued in the near-term’.

He said: ‘Attention will no doubt be drawn towards the monthly fall of 2.9 per cent from December to January, 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, with annual growth of just 0.8 per cent.

‘This could either be viewed as a story of resilience, as prices have held up well in the face of significant economic uncertainty, or as a continuation of the slow growth we’ve witnessed over recent years.’

House prices dropped nearly 3% last month after a surprisingly strong December. Halifax has now revised down its prediction for house price growth in the near future

House prices dropped nearly 3% last month after a surprisingly strong December. Halifax has now revised down its prediction for house price growth in the near future

He added: ‘There’s no doubt that the next year will be important for the housing market with much of the immediate focus on what impact Brexit may have.

‘However, more fundamentally it is key underlying factors of supply and demand that will ultimately shape the market.’

According to Halifax, the quarterly figure provides the clearest indication of overall market trends, ‘smoothing out the monthly volatility caused by the reduced number of monthly transactions used to calculate all house price indices’.

On that basis, quarterly prices are down 0.6 per cent, which compares to a 0.3 per cent fall in December and 1.1 per cent drop in November.  

The figures are based on its own mortgage approval data. 

Howard Archer, chief economic adviser at EY ITEM Club, said: ‘The Halifax reported house prices plunged 2.9 per cent month-on-month in January, which was the second largest monthly drop since September 2010.’

He said January’s drop was ‘clearly partly a correction’ after house prices surprisingly spiked 2.5 per cent month-on-month in December.

Mr Archer added: ‘Caution over making major purchases will likely be magnified in the near-term by current heightened uncertainties over Brexit.’

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, said: ‘What we are seeing on the ground is the release of some pent-up demand prompting more listings, viewings and offers over the past few weeks than we dared hope for.

‘However, interest is very patchy and real value must be perceived, otherwise little market change will result.

‘Looking forward, we do not expect any significant improvement at least until the odds on a Brexit deal improve.’

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: ‘Flat growth is probably the best we can hope for given the current tricky political situation we find ourselves in.

‘Brexit has caused a slowdown in purchase activity as would-be buyers sit on their hands, waiting for the outcome before committing to something as major as buying a new home.

‘Fewer transactions has meant less business for lenders, yet they remain keen to lend.’