UK house price growth slows; home ownership lowest since 1985

Year-on-year house price growth in the UK has pulled back somewhat more abruptly than economists had been expecting, while the level of home ownership has slumped to the lowest in over 30 years.

The annual pace of growth slumped to 3.5 per cent in March, lender Nationwide said on Friday. That’s down from 4.5 per cent in February and below the 4 per cent pace expected.

On a month-on-month basis, prices unexpectedly fell by 0.3 per cent. They were expected to rise by that amount, according to economists polled by Bloomberg.

Robert Gardner at Nationwide said:

The South of England continued to see slightly stronger price growth than the North of England, but there was a further narrowing in the differential. Northern Ireland saw a slight pickup in annual house price growth, while conditions remained relatively subdued in Scotland and Wales.

Sam Tombs, UK economist at Pantheon Macroeconomics, writes:

The dip in house prices in March followed a hefty 0.6% month-to-month increase in February, so we doubt that prices are now on a falling trend. Even so, Nationwide’s index indicates that house prices are rising at their slowest year-over-year pace since August 2015, and the slowdown is corroborated by other timely indicators from Halifax and Rightmove. Growth likely will continue to moderate as the pressure on households’ incomes from rising inflation intensifies and as employment growth remains weak.

Meanwhile, the lender also noted that home ownership levels in England have slumped, particularly among young people.

Nationwide said:

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.

While the last couple of years have seen a slight improvement in the proportion of young adults owning their own home (currently 38%), this remains considerably lower than was the case ten years ago. The data also reveals a significant fall in home ownership rates amongst those aged 35-44 to just 56% (down from 74% in 2006).

The counterpart to this trend has been robust growth in the private rental sector, with 20% of households in England now privately rented, a record high, up from 12% ten years ago. The number of privately rented households has increased by more than 75% over the past decade and now stands at 4.5 million.