The price of the typical UK home rose by 1% in September although the annual rate of increase dropped to 15.5%, the lowest for 18 months, according to the Nationwide Building Society’s latest house price survey.
The survey contains mixed news for the housing market. House sales fell back to 112,000 in August – down from 132,000 in July – although Alex Bannister, group economist at Nationwide, noted that this data was at odds with strong lending figures of £11.5bn in August and an earlier increase in July approvals.
The report also shows the slowdown in price growth has affected all areas except Northern Ireland, although there are regional variations. Nationwide’s forecast for house price growth in the year to December is now 13%.
Bannister said: “Given the 10% rise in prices seen so far this year, our forecast implies monthly changes of just over 0.9% per month for the remainder of 2003.
“Our forecast hides a diverse regional picture. We have published a full set of regional forecasts for the 12 months to Q4 this year, which range from 5% in London, 11% in the South West and 29% in the North.”
Overall, the Nationwide expects a protracted slowdown in which first-time buyers find entry into the market difficult, with less trading up and less equity withdrawal also expected.
Bannister added: “Nevertheless, a prudent approach to borrowing should be pursued, given modest pay growth and the fact that interest rates are likely to go rise.”