According to the latest Annual UK house price index by the Nationwide, growth edged up as 2019 drew to a close, with prices 1.4% higher than December 2018, the first time it been above 1% for 12 months.
The report highlighted that indicators of UK economic activity were relatively volatile for much of 2019. Still, the underlying pace of growth appeared to slow throughout the year as a result of weaker global growth and intensification of Brexit uncertainty.
However, the underlying pace of housing market activity remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years. Healthy labour market conditions and low borrowing costs appear to have offset the drag from the uncertain economic outlook.
Looking ahead, economic developments will remain the key driver of housing market trends and house prices. Much will continue to depend on how quickly uncertainty about the UK’s future trading relationships lifts as well as the outlook for global growth.
Overall, the Nationwide expects the economy to continue to expand at a modest pace in 2020, with house prices remaining broadly flat over the next twelve months. On a positive note, first-time buyer numbers have continued their steady recovery reaching 354,400 in the twelve months to October – this is more than double the 155,000 recorded in 2009 and 12% below the 2006 peak.
The trend for first-time buyers reflects robust labour market conditions, with employment rising at a healthy rate in recent years, and earnings growth slowly regaining momentum.
Low borrowing costs have also provided valuable support. Even though house prices remain high, relative to average incomes, the cost of servicing the typical mortgage as a share of take-home pay has remained close to or below long-run averages in most parts of the country.
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