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House prices in the United Kingdom are rising at their slowest rate in six-and-a-half years, according to a well-watched barometer of the property market.
The Halifax House Price Index, which is owned and collated by IHS Markit, revealed Monday that house prices in September were just 1.1% higher than in the same month a year earlier
“Whilst this is the lowest level of growth since April 2013, it remains in keeping with the predominantly flat trend we’ve seen in recent months,” said Halifax’s Managing Director Russel Galley in a press release.
On a month-to-month basis, September prices fell by 0.4% from August to reach an average value across the U.K. of £232,574 ($286,209). A Reuters poll of economists had forecast a +0.1% rise.
Galley said that the bank expected property prices in Britain and Northern Ireland to remain sluggish as long as “the current period of economic uncertainty persists.”
The Halifax figures painted a bleaker picture than a rival survey from Nationwide last week which suggested house price growth was only at an eight-month low.
The wider U.K. economy is at risk of slipping into a technical recession where gross domestic product (GDP) contracts for two consecutive quarters. Manufacturing and services data is suggesting that U.K. economy did shrink in the three months to September, following a confirmed 0.2% contraction in the April-to-June period.
The Purchasing Managers’ Index (PMI) is a measure of economic health for the manufacturing and service sectors. September’s composite PMI sank to 48.8 where anything below 50 marks a contraction.
Brexit stress on property
The uncertainty surrounding Britain and Northern Ireland’s exit from the European Union is often cited as a cause for concern within the business community.
The country is scheduled to leave on October 31 although there is some doubt that this will be possible with no deal in place between lawmakers in London and Brussels.
The nine-member Monetary Policy Committee of the Bank of England unanimously voted to hold interest rates at 0.75% in September. On the release, it warned that further delay to Britain’s departure date as well as transition to the “eventual future trading relationship” could hurt the economy.
“The longer those uncertainties persist, particularly in an environment of weaker global growth, the more likely it is that demand growth will remain below potential, increasing excess supply,” the bank said.