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House price inflation accelerates in UK

Christian Fernsby |
UK house prices increased at an annual rate of 2.3% during the final quarter of 2019, according to the latest data from the Halifax House Price Index.

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Topics: HOUSE    INFLATION    UK   

Rising from the third quarter’s six-and-a-half-year low of 1.5%, the latest increase was the strongest recorded since the first quarter of 2019.

Prices were also up 1.0% on a seasonally adjusted basis since the previous quarter, to indicate some momentum in market activity following an increase of 0.4% in the third quarter.

Despite the positive end to the year, looking at 2019 overall, the UK housing market nonetheless endured its weakest performance since 2012.

Prices rose a modest 2.0%, down from the 3.0% rise recorded in 2018 and an average increase of 3.7% during the last decade.

2019 also saw a divergence of inflation by buyer type.

Whereas house-movers recorded an increase in prices of just 1.8% in 2019, the lowest rise for seven years, first-time buyers registered a slight uptick of inflation to 2.5% (from 2.4% in 2018).

By property type, new house price inflation was 1.9%, compared to 3.0% in 2018.

Price rises for existing properties was slightly higher than new houses, coming in at 2.1% for 2019.

Regional data for the final quarter of 2019 indicated that the UK is currently split into a two-speed property market.

On the one hand, prices remained under pressure across much of the south of England.

The South East and Greater London again recorded year-onyear price declines in the fourth quarter (-0.1%) although, amid evidence of a pick-up of activity in the final weeks of 2019, price falls were notably weaker than earlier in the year.

In notable contrast, Wales (6.5%) remains the strongest performing in terms of house price inflation, whilst across the north of England (North West, Yorkshire and Humberside and the North East), inflation rates were all above 4%.

Despite easing to a one-year low, price inflation in Scotland remained marked at 3.8%.

Meanwhile, in the Midlands, both the East (2.6%) and the West (2.2%) recorded price increases that were broadly in line with the national average.

Although 2019 proved to be a challenging year for the housing market in the south of England, prices here remain comfortably above the UK average.

In London, the typical house price is currently just under £478,000, some £156,000 higher than the next most expensive region, the South East.

Moreover, despite falling on a year-on-year basis throughout 2019, prices in London have risen 73% compared to opening quarter of 2010, whilst in the South East prices are 47% higher over the past decade.

Conversely, prices in the North East and Northern Ireland remained well below the UK average at the end of 2019, coming in at £137,066 and £144,832 respectively.

Both regions have experienced the lowest net increases in prices over the past decade, with the rise in Northern Ireland just 2% (and still some 40% below their pre-financial crisis peak).

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