UK House prices increased last month at the weakest annual rate since January, according to Nationwide, although there are signs that demand in the market is beginning to improve.
Analysts said that house prices had been affected by uncertainty over Brexit and increased stamp duty charges
Prices in November were 4.4 per cent higher than a year earlier, compared with a 4.6 per cent rise in October, the UK’s second largest mortgage lender said. They were up 0.1 per cent month-on-month, taking the average cost of a home to £204,947.
After 15 months of rising house prices the Nationwide figures suggest that they have flatlined over the past two months. The quarterly rate of growth slipped from 1.2 per cent in October to 0.9 per cent in November, the lowest rate in more than a year.
Analysts said that earlier measures of buyer activity and sentiment, which cooled sharply after the shock of the Brexit vote and the impact of a 3 per cent stamp duty surcharge on second homes and buy-to-let properties, had started to feed through into house prices. This, combined with house prices already being so high, was affecting growth.
Hansen Lu, a property economist at Capital Economics, said: “We think it is more likely that house price growth will slow a little more over the next year or so. In part that’s down to demand growth and house price sentiment still being short of where they were earlier in the year. But it is also because, with house prices already so high, there is increasingly little room for them to rise further.”
Despite the slowdown Nationwide said that demand had begun to strengthen in recent months as the labour market stayed strong and record low fixed mortgage rates helped to provide support for the housing market. Job security and mortgage affordability are the two factors cited most as the reason people decide whether they can move home.
Robert Gardner, Nationwide’s chief economist, said that house prices were also likely to stay robust despite economic uncertainty after the Brexit vote as the supply of homes in the UK was unmatched by the demand. He said: “The relatively low number of homes on the market and modest rates of housing construction are likely to keep the demand/supply balance fairly tight in the quarters ahead, even if economic conditions weaken, as most forecasters expect.”
Source: Nationwide/The Times