You are here: Home - News -

Annual house price growth at lowest since 2013 – Nationwide

by:
  • 01/11/2018
  • 0
Annual house price growth at lowest since 2013 – Nationwide
Annual house price growth hit the lowest level since May 2013, with a slowdown to 1.6% in October 2018 from 2% the previous month, data has shown.

 

On a monthly basis, prices were flat in October, compared to 0.2% in September, according to the latest release from Nationwide.

Average prices slightly dropped to £214,534 in October, compared to £214,922 in September.

Robert Gardner, Nationwide’s chief economist, said that this was in line with 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.

He said: “We continue to expect house prices to rise by around 1% over the course of 2018. Looking further ahead, much will depend on how broader economic conditions evolve. If the uncertainty lifts in the months ahead, there is scope for activity to pick-up throughout next year.

“The squeeze on household incomes is already moderating and policymakers have signalled that interest rates are only expected to raise at a modest pace and to a limited extent in the years ahead.”

 

Housing market activity still relatively soft

Gardner revealed that housing market transactions remain relatively subdued, with 1.2m transactions in the 12 months to September 2018.

This figure is 30% lower than the levels seen in the same period in 2007.

He added: “There has been a significant change in the pattern of housing transactions over the past decade. In the immediate aftermath of the financial crisis, cash transactions proved more resilient.

“This is because cash buyers were less impacted by the tightening in credit conditions and the deterioration in labour market conditions, which reduced the number of people able to buy with a mortgage.

“Recent years have seen a recovery in first-time buyer transactions, which are now broadly in line with pre-crisis levels. The improvement in credit availability, historically low interest rates, together with a steady improvement in labour market conditions in recent years have all helped boost activity.

“There has been a significant reduction in the number of buy-to-let purchases involving a mortgage in recent years, which reflects a softening in demand following tax changes and differences in underwriting standards.”

 

First-time buyers instead of investors

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said that after a drop in house prices last month the trend appears to be continuing with a shortage of supply not managing to keep values up sufficiently.

He added: “The difficulty remains that economic and political uncertainty is clouding judgements at a time when the economy is really not in apparently bad shape.

“The one bit of good news is that first-time buyers are taking the place of investors which will bring some welcome good news particularly if sellers recognise the importance of negotiation.”

There are 0 Comment(s)

Comments are closed.

You may also be interested in

Read previous post:
Sterling rallies after reports of Brexit financial services deal

The UK and European Union have reached a deal on continued access for financial services firms to European markets after...

Close