House prices increased by 0.3% in September compared to 0.6% the previous month, however Nationwide pointed out that this growth has remained within the narrow range of 3% to 6% that has prevailed since early 2015.
The small slump in growth meant that the average house price fell slightly from £206,145 in August to £206,015 in September.
Regional house price growth remained modest in Scotland with a 2% rise and 2.4% in Northern Ireland, while Wales and the North of England saw slight declines in growth rates by -0.5% and -0.2% respectively. Meanwhile, regions in the south east of England continued to report the strongest growth, despite visibly slowing in the Outer Metropolitan region from 12.4% in Q2 to 9.6% in Q3 and in London from 9.9% in Q2 to 7.1% in Q3.
(not seasonally adjusted)
*Seasonally adjusted figures (note that monthly % changes are revised when seasonal adjustment factors are re-estimated)
Robert Gardner, Nationwide’s chief economist, warned that despite the number of new homes being built seeing a rise, it was not fast enough to meet demand, especially as low interest rates and Help to Buy schemes boost consumer interest.
“The number of new homes built in England has picked up, but is still not sufficient to keep up with the expected increase in the population,” he said. “In the four quarters to Q2 2016, 139,000 new houses were completed, 30% higher than the low point seen in 2010. However, this is still around 15% below the average rate of building in the five years before the financial crisis and 38% below the 225,000 new households projected to form each year over the coming decade.”
Former RICS residential chairman, Jeremy Leaf, said a lack of housing continues to underpin prices, despite demand softening slightly.
“Moving forward the increase in number of new homes being built is encouraging. The removal of Help to Buy mortgage support could also be seen as a positive as clearly the Bank of England believes there is sufficient assistance in the market for first-time buyers to continue to take advantage of low interest rates.”