House prices fall 0.1% in August
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.
‘Housing market still has a solid lead’
Lucy Pendleton, founder director of independent estate agents, James Pendleton, said: “We’re back into negative territory and the annual growth rate has been broadly shrinking like a tyre with a slow puncture since the middle of last year so no surprises that the trend has continued.
“The annual rate of growth has more than halved in a year, from 5.6% 12 months ago.
“August’s performance has matched that of May which saw the lowest annual growth rate since the Brexit vote but the market is still outpacing the economy in general by some considerable margin. Economic growth was running at only 0.3% in the second quarter so the housing market still has a solid lead.
“Robust stamp duty figures aren’t necessarily a sign of confidence. People are being forced to pay more and some markets are struggling because of it simply because it now costs too much to move. As soon as you get above £1.2m it is causing a notable slowdown in transactions.”