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House prices fall 0.1% in August – Nationwide

by: Chris Menon
  • 29/08/2017
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House prices fall 0.1% in August – Nationwide
The latest figures from Nationwide Building Society show UK house price growth dipped this month, dragging down prices and the annual growth rate, in further evidence of a cooling market.

The average price of a home fell 0.1% in August to £210,495, taking the annual growth rate down to 2.1% from 2.9% in July.

Robert Gardner, Nationwide’s chief economist, said: “The slowdown in house price growth to the 2-3% range in recent months from the 4-5% prevailing in 2016 is consistent with signs of cooling in the housing market and the wider economy.”

Gardner expressed surprise at the slowdown, despite the economy growing around 0.3% a quarter in the first half of 2017, around half the pace recorded in 2016.  

He said: “It may be that mounting pressure on household finances is exerting a drag. Wages have been failing to keep up with the cost of living in recent months and consumer sentiment has weakened. While measures of housing affordability are not particularly stretched at a UK level, pressures are evident in some regions – especially London and the South of England.”

“Ultimately, housing market developments will depend on wider economic performance. The UK economy slowed noticeably in the first half of the year, and there has been little to suggest a significant rebound in the months ahead. While employment growth has remained robust, household budgets are under pressure. This suggests that housing market activity will remain subdued,” he concluded.

Pantheon Macro

Samuel Tombs, chief UK economist at consultancy Pantheon Macro, said: “The moderation in price growth primarily reflects the squeeze on real wages and the slowdown in the pace that mortgage rates are falling. Prices will continue to struggle to rise much, given that inflation still has further to rise, consumer confidence has deteriorated sharply since June and lenders intend to reduce the supply of unsecured credit.”

He added that from February, new lending also won’t generate borrowing allowances from the Bank’s Term Funding Scheme, raising the costs of credit significantly. Accordingly, we still think that prices will be up just 1.5% year-on-year in December.”

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