The Nationwide Building Society’s latest house price index shows that house price growth slowed to just 0.5% in 2018, down from 2.6% in 2017.
The Outer Metropolitan and London regions both recorded small house price declines in 2018.
Prices fell 0.7% in the month of December, after taking account of seasonal factors.
Robert Gardner, Nationwide’s chief economist, said: “UK house price growth slowed noticeably as 2018 drew to a close, with prices just 0.5% higher than December 2017.
“This marks a noticeable slowdown from previous months, where prices had been rising at a c2% pace. However, it is broadly in line with our expectations (since the start of the year we had been anticipating a price rise of c1% in 2018).
“Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchases, have remained broadly stable in recent months, but forward-looking indicators had suggested some softening was likely.
“In particular, measures of consumer confidence weakened in December and surveyors reported a further fall in new buyer enquiries towards the end of the year. While the number of properties coming onto the market also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers.”
Jonathan Samuels, CEO of Octane Capital, added: “Brexit has smashed property market sentiment to smithereens. Buying and selling property requires confidence but confidence, as we edge closer to Brexit, is close to zero.
“For countless prospective buyers, Brexit has put everything on hold.
“Borrowing rates may be low and the jobs market strong, but a deep undercurrent of uncertainty is causing the vast majority of people to sit on their hands.
“What growth there is, is in the North, which hasn’t experienced the over-exuberant price inflation of the capital and other areas of the South.
“By contrast, professional and opportunist investors have never been as active. It’s about as good a buyers’ market as it could get.
“A low single digit pace in growth is probably the best we can hope for in 2019. In fact, growth of any kind will be a victory.”