The typical property price in Britain has fallen almost £4,000 in four months dragged down by London and the commuter belt.
Average home values have dropped from £232,116 in September 2018 to £228,147 in January 2019, data from the Office for National Statistics show.
London saw the biggest lull – prices fell 1.6 per cent over the year to January 2019, a further decrease from the 0.7 per cent recorded in December 2018.
This was followed by the East where prices fell 0.2 per cent, the first recorded fall in the region on an annual basis since October 2011.
House prices are continuing to rise annually but are at their slowest rate in almost six years
Ewen Bunting, head of sales at independent estate agents James Pendleton, said: ‘No one was expecting fireworks after New Year while the clock runs down on Brexit but things appear to be coming to a head rather earlier than we had initially expected.’
‘The market is plumbing near six-year lows and Londoners are feeling the worst of it with the gap between house price growth and inflation widening to more than three per cent.
‘This represents a substantial real terms annual loss.’It’s no surprise slowing house price growth is swayed in a large part by downward trending prices in London and the South East.
‘Uncertainty and an element of caution among those who don’t strictly need to move remains the order of the day, though on the capital’s doorsteps we’re seeing those who are prepared to adjust expectations continue to transact quite well.’
The figures do show that house price inflation has continued to rise annually across Britain, but at their slowest rate in nearly six years.
Average home values increased 1.7 per cent in the year to January 2019. This is down from 2.2 per cent in December 2018 – the lowest annual rate since June 2013 when it sat at 1.5 per cent.
The ONS figures lag a month behind other indexes, such as those from Halifax and Nationwide Building Society and are likely to paint a sorrier annual picture in the coming months.
On a country basis, Wales saw the strongest house price growth, increasing 4.6 per cent in the year to January 2019, with the average house price now sitting at £160,000.
There has been strong growth in the South East of Wales, which could be linked to the abolition of the Severn Bridge tolls.
Scotland saw the slowest rate out of all the other countries in Britain, increasing by 1.3 per cent. The average house price in the region is now at £149,000.
England has an average house price of £245,000, an increase of 1.5 per cent over the year to January 2019.
Northern Ireland house prices increased by 5.5 per cent over the year to Quarter 4 (October to December) 2018. It remains the cheapest UK country in which to buy a property, with the average house price at £137,000.
House price growth: England has the highest average house price out of the UK countries
Southern England (London, East of England, South East and South West) saw a sustained slowdown with house prices falling by 0.2 per cent in the year to January 2019.
The Midlands saw growth of 4.2 per cent whilst Northern England (North East, North West, and Yorkshire and The Humber) also saw growth of 2.8 per cent.
East Midlands saw the highest annual growth with prices increasing by 4.4 per cent, closely followed by the West Midlands at 4 per cent.
Despite London house prices falling over the year, the area is the most expensive place to purchase a property at an average of £472,000.
The South East and the East of England followed at £321,000 and £288,000 respectively.
The North East has the lowest average house price at £125,000 and is the only English region yet to surpass its pre-economic downturn peak.
London has had the largest growth in house prices, by quite a way, over the past 14 years
Jonathan Samuels, chief executive of property lender, Octane Capital, believes that buyers are holding off until there is clarification over Brexit arrangements.
He said: ‘Another day, another output of pretty dire house price data, particularly from the capital.
‘Uncertainty over Brexit continues to dictate the field of play and this could continue for some time given the current chaos in Parliament.
‘Buyers continue to call the shots but many sellers are also deciding to postpone until there is more clarity and in the hope that the market could bounce back in their favour.’
However, he added: ‘While the UK property market as a whole has been hit for six, prices in south east Wales have been hit for Severn.
‘The abolition of the Severn Bridge tolls has had a hugely positive impact on prices in that corner of Wales.
‘A lot of people who would traditionally have purchased in Bristol and surrounds are now looking across the estuary into Wales where your money goes a lot further.’
London has seen a -1.6% change in the last 12 months with East Midlands seeing 4.4% rise
The ONS figures come after revised forecasts from the Office for Budget Responsibility.
Its five-year prediction is now for 17 per cent growth instead of 20 per cent and said: ‘Indicators of housing market activity and price expectations have deteriorated significantly since our October forecast and are consistent with a further fall in house price inflation.’
Concerns over Brexit and stretched affordability were blamed by property experts for the slowdown in house price growth.
Figures from Rightmove also revealed that Brexit was to blame for asking prices rising at their slowest pace in March for eight years.
It found the average price of property across the UK coming to market in March rose by just 0.4 per cent, or £1,287, to £302,002.
This makes it the lowest average monthly rise at this time of year since 2011 – considerably lower than the 0.9 per cent average over the last seven years.
Jeremy Leaf, North London estate agent and a former RICS residential chairman said: ‘After last month’s encouraging figures, this month’s UK HPI is much gloomier, showing once again it is dangerous to read too much into one set of numbers.
‘However, we are finding that mood reflected on the ground – a patchy market at best in some areas whereas in other, sometimes even those adjoining, there is more optimism.
‘This is borne out perhaps more in the numerous micro markets of London where local factors are often much more relevant than the national picture.’
Inflation edges up but remains below Bank of England target
Inflation rose in February but still remained below the Bank of England’s target, as food and alcohol price rises were offset by weaker growth in both clothing and footwear, according to new figures.
The Consumer Prices Index rose to 1.9 per cent, data from the ONS shows. This is despite economists expecting inflation to hold at 1.8 per cent after the January rate came in below the Bank of England’s 2 per cent target for the first time in two years.
CPI, including owner-occupiers’ housing costs, which is the ONS’ preferred measure of inflation, remained unchanged at 1.8 per cent in February.
Mike Hardie, head of inflation at the ONS, said: ‘The rate of inflation is stable, with a modest rise in food as well as alcohol and tobacco offset by clothing and footwear prices rising by less than they did a year ago.’
Food prices were up 0.4 per cent on the month, compared with 0.1 per cent last year whilst there was a 0.9 per cent increase on the month for alcohol and tobacco versus flat prices in February 2018.
Beer prices were up 0.6 per cent between January and February, compared to a decline of 1.1 per cent last year. Food and alcohol hit annual inflation of 1.1 per cent and 5.1 per cent, respectively.
However, clothing and footwear had a downward effect with the increase smaller in February than in the same period last year as clothing and footwear prices dropped 2 per cent annually.
Motorists saw lower fuel costs last month as petrol fell by 0.5p per litre on the month to 119.1p, whilst diesel also fell by 0.2p to 129.3p.
The Retail Prices Index, a separate measure of inflation, was 2.4 per cent, down from 2.5 per cent in January – the lowest percentage since October 2016 when it was 2.2 per cent.