UK house prices fall for first time in nearly two years

Average house prices across the UK fell by 0.3% from February to March, according to the latest monthly report from Nationwide, published on Friday.

This is the first fall since June 2015, and the largest such decrease for nearly five years. It pushed the annual rate of house price growth down to a 19-month low of 3.5%, which was weaker than expected.

Robert Gardner, Nationwide’s chief economist, noted that there was a mixed picture across the UK during the first quarter, with six regions seeing the pace of house price growth accelerate, another six seeing a deceleration and one recording the same rate as the previous quarter.

“Interestingly, the spread in the annual rate of change between the weakest and strongest performing regions was at its narrowest since 1978 at 6.8 percentage points — the second smallest gap on record,” Gardner added.

Nationwide also highlighted figures from the Department for Communities and Local Government’s latest English Housing Survey which showed a further decline in the home ownership rate to 62.9% in 2016 — the lowest recorded since 1985.

“Over the past decade, there has been a particularly marked decline in the home ownership rate amongst young adults (those aged 25-34), traditionally the segment containing most first time buyers,” Gardner pointed out.

A separate report released on Friday illustrated the barriers facing young people and those on low incomes who want to own their own home.

The National Housing Federation analysed where in the country people in different jobs can afford to rent and buy, revealing that house prices in England more than doubled (+120%) between 2002 and 2016, while salaries only increased by 38% during the same period.

According to the report, there is now only one local authority in the whole of England — Burnley in Lancashire — where a low-paid worker, such as a nursery nurse, could afford an average mortgage without spending more than five times their annual income.

At the same time, there is no area of the country where low-paid workers pay less than 30% of their monthly income on rent. Private rents are particularly high in London and the South East, where rent typically takes up more than 50% of low-income workers’ pay.

Five million low-paid workers across the country have been completely priced out of either renting or buying a home, the report concluded.

“This analysis makes for truly depressing reading,” said David Orr, chief executive of the National Housing Federation. “Low-income workers are left with fewer affordable options than ever even though their jobs are absolutely critical to local economies.”