UK house prices continue to soften but growth still positive
However, annual property value growth is still positive at +2.2% despite a fall from 3.2% the previous month.
Robert Gardner, Nationwide’s chief economist, said: “Retail sales were relatively soft over the Christmas period and at the start of the new year, as were key measures of consumer confidence, as the squeeze on household incomes continued to take its toll.
“Similarly, mortgage approvals declined to their weakest level for three years in December, at just 61,000. Activity around the year end can often be volatile, but the weak reading comes off the back of subdued activity in October and November.”
Gardner said the strength of the housing market this year will be determined by the wider economy and the path of interest rates.
“Brexit developments will remain a key factor, though these remain hard to foresee. We continue to expect the UK economy to grow at a modest pace, with annual growth of 1% to 1.5% in 2018 and 2019. Subdued economic activity and the ongoing squeeze on household budgets is likely to exert a modest drag on housing market activity and house price growth,” he added.
Richard Sexton, director, e.surv said limited housing supply continues to act as a bottleneck, squeezing potential buyers out.
“Saving for a deposit is one of the biggest challenges would-be homeowners face, particularly for those in the capital.
“Our most recent Mortgage Monitor showed that only 17% of loan approvals went to borrowers with small deposits in London.
“Although we have seen a commitment from the government to address our housing crisis with an exemption of Stamp Duty for first-time buyers, only time will tell if this has been enough to fully support them.”