House prices fell by 0.7% in December, with annual growth at its weakest since February 2013, according to the latest Nationwide House Price Index. House prices are now just 0.5% higher than in December 2017, below the 1% rise Nationwide had expected over the year.
Nationwide says the fall in prices marks a “noticeable slowdown from previous months”, where prices had been rising at around 2%, and attributes the slowdown to weakened consumer confidence as surveyors report a further fall in new buyer enquiries.
Robert Gardner, Nationwide's chief economist, said: “It is likely that the recent slowdown is attributable to the impact of the uncertain economic outlook on buyer sentiment, given that it has occurred against a backdrop of solid employment growth, stronger wage growth and continued low borrowing costs. Near term prospects will be heavily dependent on how quickly this uncertainty lifts, but ultimately the outlook for the housing market and house prices will be determined by the performance of the wider economy – especially the labour market.
“The economic outlook is unusually uncertain. However, if the economy continues to grow at a modest pace, with the unemployment rate and borrowing costs remaining close to current levels, we would expect UK house prices to rise at a low single-digit pace in 2019.”