House prices have been remarkably resilient
Prices were up 2.6 per cent through 2017 putting the cost of a typical house at £211,156 in December – up more than £1,000 on November’s value.
London’s over-heated market appears to be correcting itself as the capital became the UK’s weakest-performing region for the first time since 2004.
Prices were down 0.5 per cent annually to an average £470,922, according to Britain’s biggest building society.
And for the first year since 2008, prices in northern England and the Midlands combined grew at a faster rate than in southern England, the Nationwide said, with a 3.6 per cent year-on-year increase compared with 1.6 per cent.
House prices in London have slowed but the rest of the country has picked up the slack
All things considered, modest annual growth of 2.6 per cent shows the market is fundamentally in a very healthy state. The major surprise during 2017 was undoubtedly the slowdown in London house prices.
The strongest-performing region was the West Midlands, with prices up by 5.2 per cent annually, followed by the South West at 4.8 per cent.
An increase of 3.3 per cent was seen in Wales, with 2.6 per cent in Scotland and two per cent in Northern Ireland.
Alex Gosling, founder of online estate agents HouseSimple.com, said: “Considering that Brexit doom-mongers predicted that property prices would plummet following the Brexit vote in 2016 and Article 50 being invoked, the housing market has proved surprisingly resilient in 2017.
“Even a calamitous General Election and the first interest rate rise in a decade failed to knock the housing market off its tracks.
House prices are expected to rise a modest 1 per cent in 2018
“All things considered, modest annual growth of 2.6 per cent shows the market is fundamentally in a very healthy state.
“The major surprise during 2017 was undoubtedly the slowdown in London house prices.
“It’s been 13 years since the capital sat at the bottom of the house price growth table, and since then we have seen prices surge to unprecedented and unaffordable levels.
“Fortunately, there’s no longer the reliance on the London market to prop up the rest of the country.
“Growing regional business hubs have seen other major UK cities prosper, while London has suffered as property prices have become unaffordable for the majority.”
First-time buyers face eight years of saving for a mortgage deposit, rising to nine years in the South East and nearly 10 years in London, according to Robert Gardner, Nationwide’s chief economist.
“A 20 per cent deposit in London now typically equates to more than £80,000, based on the average first-time buyer price,” he said.
“This is around £30,000 higher than a decade ago.
“In other regions, such as the Midlands and northern England, deposit requirements are similar to 2007.”
It’s becoming harder to save for a deposit, especially in London
Mr Gardner said subdued economic activity and an ongoing squeeze on household budgets is likely to exert a modest drag on housing market activity and price growth in 2018.
He said: “Overall, we expect house prices to record a marginal gain of around 1% in 2018.
“Over the longer term, once the economy regains momentum, we expect house prices to rise broadly in line with earnings.
“Much will depend on how Brexit impacts on the UK economy.”
The annual house price rise was the slowest for any calendar year since 2012.
It compares with a 4.5 per cent annual increase in December 2016.
Mr Gosling added: “The first-time buyer stamp duty cut in the Autumn Budget should at least give the bottom end of the market a much needed confidence boost and help keep the market moving.
“And it’s vital that early progress is made by the Government in trade talks with Brussels to avoid fear from seeping into the minds of buyers and sellers.”