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Surprise December 2019 bounce in house prices say Nationwide

House price inflation was up by 1.4 per cent annually last month despite December typically being one of the slowest in the property market, figures from Nationwide Building Society show.

The strong end to the 2019 came during a Conservative election win and after stagnant growth. No month had annual inflation above 1 per cent previous to December.   

It means the average property price now sits at £215,282, though growth was just 0.1 per cent compared to November and values were dragged down by London and the South East.

Home values in the capital for example were 1.8 per cent lower in the three months to December than they had been a year earlier, while property growth in Scotland was the strongest. 

Surprise December bounce: The average property price now sits at £215,282 – with Scotland performing strongly. Pictured: Queensferry on the outskirts of Edinburgh

Robert Gardner, chief economist at Britain’s biggest building society played down chances of a ‘Boris bounce’ for the property market in 2020. 

He said: ‘Economic developments will remain 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.

He adds: ‘Overall, we expect the economy to continue to expand at a modest pace in 2020, with house prices remaining broadly flat over the next 12 months.’

A group of economists previously forecast a roughly 2 per cent rise in property prices this year, while estate agents Savills expected them to inch up just 1 per cent over the course of 2020.

Savills’ Lawrences Bowles said: ‘At the top end of the market in particular, we’ve seen a strong build-up of new buyer demand.

‘Greater political certainty will unlock some of that demand, but with less than a year to agree a Brexit deal, there are still many unknowns.

‘As a result, we expect average house prices to rise by just 1 per cent in 2020, and a higher 4.5 per cent in 2021, as improving certainty translates into higher growth in wages and GDP.’

Mapped: While house prices mostly stayed flat in 2019, they fell in London and the South East

Mapped: While house prices mostly stayed flat in 2019, they fell in London and the South East

Nationwide’s rival Halifax forecast house price growth of between 1 and 3 per cent.

Mark Harris, the chief executive of mortgage broker SPF Private Clients, said: ‘Nationwide reports that the housing market held up remarkably well in 2019.

‘This has been assisted by strong employment, low mortgage rates and a lack of supply, which supported prices even in the face of considerable economic and political uncertainty.

‘First-time buyers were the big success story of the year, steadily growing in number.’

House price growth has remained below 1% for 11 months of last year

House price growth has remained below 1% for 11 months of last year

Nationwide’s figures said first-time buyer numbers reached 354,400 in the 12 months to October, more than double numbers in 2009.

Mr Harris added: ‘Lenders are doing their bit, offering higher loan-to-values at competitive rates and more innovative products which enable the Bank of Mum and Dad to offer assistance.

‘Being able to afford a mortgage in London remains the biggest challenge, despite the softening of prices there, while outside of the capital it is the deposit which continues to be the issue.’

Nationwide’s latest index found house price growth in London and the South East had gone into reverse annually, with property prices in the capital around 1.8 per cent lower at the end of December than they had been a year earlier.

London’s shrinking house price inflation was contagious – values in the outer south east had fallen 1 per cent, while those in outer Metropolitan boroughs had inched up just 0.3 per cent in the three months to December 2019.

Separate figures from the Official for National Statistics and HM Land Registry found prices in London fell 1.6 per cent over the course of 2019, and 0.3 per cent in the South East.

Adrian Anderson, director of mortgage broker Anderson Harris, said: ‘Many clients have seen the last 12 months as a good opportunity to purchase in London and the South East for the long term as mortgage rates are cheap and values have been steadily dropping in many areas.

‘There is a price war among lenders, with mortgage rates almost the lowest we have seen, both for short-term and long-term fixed rates, making it a good time to borrow. It appears that mortgage rates will remain low during 2020.

‘An increase in high loan-to-value mortgages at low rates, as well as a dip in values in London and the South East, have helped first-time buyers. 

‘However, values are still incredibly high compared to income multiples so the bank of Mum and Dad or inheritance has been involved in virtually every first-time buyer mortgage we see.’

Meanwhile, Scotland saw prices up 2.8 per cent year-on-year, West Midlands 2.7 per cent, North 2.6 per cent and the North West 1.8 per cent in the three months to December.

The Nationwide house price report added: ‘This is the first time since 2008 that Scotland has ended the year as the top performing region. London ended the year as the weakest performing region.’

It adds that while this is the tenth quarter in a row that prices have fallen in the capital, they are still only 5 per cent below all-time highs recorded at the start of 2017.

Values are also 50 per cent above their 2007 levels in the capital, whereas prices in Britain as a whole are 17 per cent higher than their 2007 peak.   

It adds: ‘By contrast, house price growth returned to positive territory in the neighbouring outer Metropolitan region – which includes places such as Slough, Guildford, Crawley and Chelmsford – after five consecutive quarters of falls. 

‘However, the surrounding outer south east region – which includes cities such as Brighton, Southampton and Oxford – saw a 1 per cent annual decline.’

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