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UK House Price Inflation Weakest Since Early 2013 Amid Brexit Uncertainty

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UK house price inflation slowed sharply in December to its weakest level since early 2013, as buyer confidence eroded amid the persistent uncertainties linked to Brexit, results of a key survey showed on Friday.

The house price index rose 0.5 percent year-on-year following a 1.9 percent increase in November, the Nationwide Building Society reported. Economists had forecast a 1.5 percent increase. In December 2017, house price inflation was 2.6 percent.

The latest house price annual growth was the weakest since February 2013, when price were unchanged.

Compared to the previous month, house prices fell 0.7 percent in December after a revised 0.4 percent increase. Economists were looking for a 0.1 percent gain. The monthly decline was the first in four months.

"It is likely that the recent slowdown is attributable to the impact of the uncertain economic outlook on buyer sentiment, given that it has occurred against a backdrop of solid employment growth, stronger wage growth and continued low borrowing costs," Nationwide's Chief Economist Robert Gardner said.

While near term prospects for the house prices are heavily dependent on how quickly the Brexit uncertainty lifts, the outlook for the housing market and house prices will be ultimately determined by the performance of the wider economy, especially the labor market, the economist added.

"The economic outlook is unusually uncertain," Gardner said.

"However, if the economy continues to grow at a modest pace, with the unemployment rate and borrowing costs remaining close to current levels, we would expect UK house prices to rise at a low single-digit pace in 2019."

In the three months to December, UK house prices rose 2.1 percent year-on-year and 1.3 percent from the previous quarter.

The average price of house was GBP 214,178 in the fourth quarter.

In 2018, Outer Metropolitan and London regions both registered modest decline in house prices, the Nationwide said.

Yet, the price of a typical home in the south of England - especially London and Outer Metropolitan, at GBP 329,240, was still almost double that in the north at GBP 166,642.

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