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August house price fall largest since July 2012

Paloma Kubiak
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Paloma Kubiak

Annual house price growth softened in August to 2% from 2.5% in July, with the average house price standing at £214,745 compared with £217,010 in July, data reveals.

On a monthly basis prices dropped by 0.5% against a 0.7% rise in July, recording the largest monthly decline in over six years, according to the latest figures released by Nationwide Building Society.

Robert Gardner, Nationwide’s chief economist, said annual house price growth remains within the fairly narrow range of 2-3% which has prevailed over the past twelve months. This suggests little change in the balance between demand and supply in the market.

He added: “Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates.

“Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on house price growth and market activity this year, though borrowing costs are likely to remain low. Overall, we continue to expect house prices to rise by around 1% over the course of 2018.”

The report revealed there were around 48,000 Help to Buy (HTB) equity loan completions in England in the twelve months to March 2018, up 21% on the same period last year.

Lucy Pendleton, founder director of independent estate agents, James Pendleton, said a 1% increase in 2018 would mean prices finish on just over £213,000, a level not seen since April and only around £1,500 lower than current prices.

“That would undo most of the year’s gains, so if that happens, expect the slowdown to feed into the Brexit mood music as the UK careers toward an uncertain future and possible hard Brexit in early 2019.

“House price support is still coming from record low unemployment and wage growth that is doing a better job of keeping pace with the rising cost of living. However, it is the Help To Buy scheme’s impact on the market that is highlighted here. For the number of Help To Buy loans to increase 21% in a year points to the huge additional demand that it has created, propping prices up at a higher level than would have been achieved in its absence.”