Official house prices fall for third successive month

The Office for National Statistics, which reports the numbers alongside wider price data, revealed that UK house prices fell 0.1% month-on-month in November, which came after declines of 0.4% and 0.3% in previous months.

The annual rate of increase edged up to 2.8% in November from the 2.7% in October, which had been the weakest year-on-year increase since July 2013. However, this rise was short of the consensus forecast of 3.0%.

Prices in London fell 1.2% month-on-month and 0.7% year-on-year in November.

Mortgage approvals for house purchases slowed to a seven-month low in November, according to Bank of England data, while buyer enquiries fell at a faster rate and for a fourth successive month in the November report from the Royal Institution of Chartered Surveyors.

Land Registry houses prices, which are based on mortgage completions, are a little stronger on an annual basis than other measures from the likes of Nationwide and Halifax that are grouped around the 0-2% range, pointed out economist Samuel Tombs at Pantheon Macroeconomics, but has still has slowed significantly over the last year.

"The lingering difference with the unofficial data appears mainly to reflect continued issues with the quality of initial estimates of new-build prices; price gains initially are overstated, then revised down. While Brexit uncertainty has dampened both demand and prices, the pick-up in the construction of new homes -- especially flats, which fell in price by 0.4% year-over-year in November -- also is weighing on prices."

Looking ahead, he was among many people expecting a lifting of Brexit uncertainty to trigger a recovery in households’ confidence.

But he also said it will "give the MPC the green light to begin to raise Bank Rate at a faster pace, hitting affordability. While the proportion of first-time’ buyers incomes that is absorbed by monthly repayments is low right now, it will shoot up if mortgage rates rise, because LTI ratios are at a record high".

Howard Archer, chief economic advisor to the EY Item Club, said if the UK manages to leave the EU with a deal at the end of March, he expects UK house prices to eke out a gain of 2% over 2019.

"Reduced uncertainty could help housing market activity pick up along with a likely gradual improvement in consumers’ real income growth. Meanwhile, high employment, still low interest rates and a shortage of houses on the market will also likely offer some support," he added.

"If the UK leaves the EU at the end of March without an approved Brexit 'deal', house prices could well fall by up to 5% in 2019 amid heightened uncertainty and weakened economic activity."