House price growth has slumped to its lowest level since 2013, driven by declines in London.
Annual growth in January dropped back to 1.7pc, from 2.2pc in December, while prices in the capital dipped 1.6pc – the fastest rate of decline since 2009, according to the latest Office for National Statistics (ONS) data.
The annual growth rate has been slowing since mid-2016. Brexit uncertainty has created a stagnant property market as would-be buyers take a wait-and-see approach.
The average house price in the UK is now £228,147, down from a peak of £232,116 in August.
Evidence of London’s sluggish property market is apparent, with the capital recording the lowest annual growth of any UK region, while prices in regions such as the Midlands are surging. The West Midlands recorded annual price growth of 4pc, while the East Midlands was 4.4pc higher.
The ONS figures come one week after the Office for Budget Responsibility (OBR) downgraded official forecasts for house price growth over the next few years.
It predicted that average prices will drop by 0.3pc in the fourth quarter of 2019 before growth returns in the second quarter of 2020, to 0.9pc, remaining well below the previously forecast figure of 3.1pc. It predicts growth will hit 4pc in the final quarter of 2021.
The outlook was revealed as as the Royal Institution of Chartered Surveyors (Rics) warned that prolonged Brexit uncertainty will damage the UK housing market.
Its monthly residential market survey, which gathered the views of more than 300 chartered surveyors, found more than three quarters of respondents believed Brexit uncertainty was holding back the market, as buyers and sellers awaited the outcome of negotiations.
Rics chief economist, Simon Rubinsohn said it was clear from professionals working in the market that “this environment requires a greater degree of realism from those looking to move”.
He added: “A reluctance from some vendors to acknowledge the shift in the balance of power in the market will compound the difficulty in executing transactions.”