House price growth falls to lowest level since May 2013

North-South house price divide set to reverse as property values rise faster in northern England, Wales and Scotland than in London

Tax changes have made property investment less lucrative (PA)

House price growth has fallen to its lowest level in more than five years, according to Nationwide.

The building society said the average property value increased 1.6 per cent annually in October to £214,534. Month-to-month there was no growth at all.

Robert Gardner, Nationwide's chief economist, said: “October saw a slowdown in annual house price growth to 1.6 per cent from 2 per cent in September.

“As a result, annual house price growth moved below the narrow range of 2 per cent to 3 per cent prevailing over the previous 12 months.

“However, this was broadly in line with our expectations, as the squeeze on household budgets and the uncertain economic outlook is likely to have dampened demand, even though borrowing costs remain low by historic standards and unemployment is at 40-year lows.

Separate research found that the North-South house price divide will reverse in the next five years as property values rise faster in northern England, Wales and Scotland than those across London.

On a national level, house prices are expected to increase by 14.8 per cent from 2019 to 2023, according to forecasts from real estate adviser Savills.

The rise would amount to around £32,000 extra on the average cost of a home.

Savills said stricter mortgage lending rules introduced following the financial crisis will limit house price increases - but the toughened rules which make sure mortgages are affordable for borrowers will also help to protect the housing market from prices nosediving.

Last week, a report from Zoopla found that the asking price of almost two-in-five properties for sale in Britain has been reduced by an average of more than £26,000, new research.

Sellers cut the price of 37.9 per cent of homes, up from 32.4 per cent in April, property website Zoopla said.

The figures highlight big differences in the housing market across different regions with Manchester and Glasgow performing well while London lags behind.