Inflation-adjusted house prices were down by 1.44% y-o-y in Q3 2019

House prices in UK are still rising, though not in inflation-adjusted terms. The average UK house price rose slightly by 0.33% (but actually dropped 1.44% when adjusted for inflation) to £216,805 (US$ 276,968) during the year to Q3 2019, based on the figures from Nationwide. It was actually the lowest y-o-y rise since Q1 2013. Quarter-on-quarter, real house prices were almost unchanged during the latest quarter.

London was the worst-performing region during the year to Q3 2019, with house prices falling by 1.7% (-3.4% inflation-adjusted), followed by Outer Metropolitan Area (-1.5%) and Outer South East (-0.6%). Some high-end London districts have experienced significant price-falls. 

The UK housing market will likely be at a “standstill” this year, but the chronic housing shortage will prevent a significant drop in prices, according to the Royal Institution of Chartered Surveyors (RICS). Property transactions are expected to fall by about 5% in 2019 from a year earlier, mainly due to the political and economic uncertainty surrounding UK’s Brexit referendum, with buyers taking a more cautious stance.  

Rents, rental yields: London yields are poor, at around 2.6%

London apartment costs are very expensive, at €18,057 per sq.m.

UK: typical city centre apartment buying price, monthly rent (120 sq. m)
  Buying price Rate per month Yield
London (Prime Central $2,166,840 $4,715 2.61%

Recent news. The UK economy grew by 1.4% in 2018 from a year earlier, down from a growth of 1.8% in 2017 and the slowest pace since 2012. Then in Q3 2019, the economy expanded by a miniscule 1% from a year earlier, following a y-o-y growth of 1.3% in Q2 2019, according to the Office for National Statistics (ONS). In fact, it was the lowest y-o-y growth in almost a decade. But the economy avoided a technical recession by growing by 0.3% during the latest quarter, after a quarterly contraction of 0.2% in Q2 2019. Recently, the Bank of England slashed its economic growth forecast for 2019 to 1.3%, from its earlier projection of 1.5%.

In November 2019, the Bank of England (BoE) held its key rate unchanged at 0.75%, after raising it by 25 basis points in August 2018. It was the highest level since February 2009.