Brexit and an uncertain economic outlook are behind a slowdown in annual house price growth, according to a new report.
The Nationwide’s latest House Price Index shows that price growth was at 1.6% in October, down from 2% in September. The average price for a property, seasonally adjusted, was virtually unchanged from the previous month at £214,534.
However, recent measures have resulted in more activity from first-time buyers to give some momentum to the market.
The building society’s chief economist Robert Gardner said the figures were not a surprise.
“This was broadly in line with our expectations, as the squeeze on household budgets and the uncertain economic outlook is likely to have dampened demand, even though borrowing costs remain low by historic standards and unemployment is at 40-year lows.
“We continue to expect house prices to rise by around 1% over the course of 2018. Looking further ahead, much will depend on how broader economic conditions evolve. If the uncertainty lifts in the months ahead, there is scope for activity to pick-up throughout next year. The squeeze on household incomes is already moderating and policymakers have signalled that interest rates are only expected to raise at a modest pace and to a limited extent in the years ahead.”
Better news on first-time buyers
The Help To Buy scheme, extended until 2023 in this week’s Budget, was highlighted as a reason why first-time buyer numbers are roughly back to the kind of levels seen before the financial crisis that erupted a decade ago.
But with the rate of house price growth at its lowest level since May 2013, Britain’s departure from the EU next March and other factors are playing their part in the Nationwide’s findings.
“We suspect that the housing market will be relatively lacklustre over the coming months,” said Howard Archer, chief economic adviser at the EY Item Club. “There are varying performances across regions with the overall national picture dragged down by the poor performance in London and parts of the South East.”
