UK House Price Growth Slows

UK house price growth slowed on an annual basis in September compared with August, as demand for property has shown signs of slowing, a monthly survey from high street lender Nationwide said.

According to the report, the average UK house price in September – based on the mortgages Nationwide provided over the course of the month – was £206,015. That’s a 0.3% increase from August and 5.3% higher than September 2016. Although house prices are continuing to rise, they are doing so at a slower pace; in August house prices rose 0.6% on the month and by 5.6% on the year.

Nationwide’s chief economist Robert Gardner said the slower pace of house price growth suggests that both demand for homes and the supply of them are falling.

“Survey data indicates that, while new buyer enquiries have remained fairly subdued, the number of homes on the market has remained close to all-time lows, in part due to low rates of construction activity,” Mr. Gardner said.

That house prices are rising at a slower pace indicates demand for property is continuing to fall, possibly, as would-be buyers are being more cautious about the price they’re willing to pay for a home.

As well as giving the monthly snapshot of national house price movements, September also marks the end of the third quarter and Nationwide has published its quarterly, regional index for house prices over that period too.

The average price of a home in Greater London was 9.1% higher in the third quarter of this year than the same period in 2015, which was the highest rate of year-on-year house price growth by region, the lender said. House prices in Wales fell 0.5% over the same period, which was the weakest regional performance.

However, a closer look at all the figures show signs of some convergence between house prices in the north of England and in the south. Nationwide’s data shows a slowdown in the pace of house price growth in southern England and an increase in the pace of house price growth in the north.

“Most southern regions saw a slowing in annual price growth compared with Q2, while a number of northern regions, such as the North West, saw a pick-up in growth,” Nationwide’s Gardner said. “Overall, prices in Southern England (South West, Outer South East, Outer Metropolitan, London and East Anglia) were up 7.5% year-on-year, whilst in Northern England (West Midlands, East Midlands, Yorkshire & Humberside, North West and North) prices rose by 4.0%.”

Of course, the difference between average prices in both regions remains large, some £323,913 between the average price for London and Yorkshire & Humberside to be exact. But, if the recent trend continues, this gap will shrink.

The report also showed the national UK average house price was 1.1% higher in the third quarter compared with the second, while the annual change was a 6.6% increase. That was a slower pace of growth than the 7.6% year-on-year gain recorded in the second quarter.

While house price growth may be slowing, it’s still rising at a much faster pace than that of earnings. That means the latest data confirm it remains tough for potential home-buyers – first-time buyers in particular – to save a large enough deposit to buy a home with an affordable mortgage.

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