Upward trend in UK house prices slows

UK house prices have continued to increase yet at a slower rate than earlier this year, according to the Nationwide Building Society index.

Nationwide Building Society Index September
House prices in the UK continued on their upwards path in September but at a slower pace than earlier in the year, according to the Nationwide Building Society index published on Friday.The September average price stood at £206,015 under Nationwide's methodology, representing a 0.3 per cent rise on August and 5.3 per cent annual growth. The year-on-year rate in August stood at 5.6 per cent.

Variations across the country

Across the UK, there were wide regional variations. The average price in London stood at almost £475,000, representing an annual rate of 7.1 per cent – considerably below the 9.9 per cent recorded in the second quarter.London's Outer Metropolitan area, which includes areas such as west Kent, Reading, St Albans and Luton, saw the strongest annual growth of 9.6 per cent, bringing the average price to £358,153. Other areas of SE England recorded an 8 per cent growth rate, while East Anglia property rose by 7.3 per cent.By comparison, Wales saw a 0.5 per cent annual fall, reducing the average property price there to £146,172. In Scotland, there was a 2 per cent rise, taking the average to £143,275.Robert Gardner, Nationwide's chief economist, said, “The relative stability in the rate of house price growth suggests that the softening in housing demand evident in recent months has been broadly matched on the supply side of the market. 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.“The number of new homes built in England has picked up, but is still not sufficient to keep up with the expected increase in the population.“With interest rates expected to remain low and schemes, such as Help to Buy, helping to provide those with smaller deposits access to finance, housebuilders should have confidence that there will be sufficient demand from buyers if more homes are built. "The major housebuilders appear to have capacity to expand output, with most reporting land banks that could support around five years’ worth of construction at current rates of building activity. However, there is a risk that the uncertain economic outlook may weigh on activity in the period ahead."

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Property Partner

Rob Weaver, director of investments at property crowdfunding platform Property Partner, commented, “We may be seeing a slowdown but house prices are still creeping upwards month on month. There’s been stability in residential property that’s reassuring particularly post-Brexit and proof of the underlying strength in this market compared to the panic seen in the commercial sector.“The uncertainty following the EU referendum result and a hike in stamp duty have seemingly dampened buyer enthusiasm. In our experience, September has not seen the normal pick-up in activity after the summer recess, as we suspect buyers and investors have merely delayed rather than cancelled their decision to buy."

Garrington Property Finders

Jonathan Hopper, managing director of Garrington Property Finders, added, “After August’s unexpected surge, these more modest figures from the Nationwide represent a return to the post-Brexit norm. With both supply and demand slipping, average prices are creeping up almost by default.“But even though the economic fundamentals are far from normal, so far the impact of the Brexit vote has been a soft landing rather than a slump – a point reinforced by the Nationwide’s surprisingly robust quarterly figures. Average prices across the UK rose at a faster rate during the three months after the vote than they did in the three months before it.“That said, it’s premature to talk of a post-Brexit boost. Price rises in the wake of the vote have been flattered by a temporary injection of pent-up demand – as buyers who sat on the fence in the run-up to the referendum finally get off it."

Thorgills

Ben Madden, managing director of London estate agents Thorgills, said, “The annual rate of house price growth may have nudged down but the slight uptick in September shows a resilience in the market that many did not expect post-Brexit. "The acute supply shortage is the major pillar supporting house prices but the recent interest rate cut and the prospect of another cut to come also stimulated demand in September and complemented the usual seasonal uplift. "Without a shadow of a doubt, prospective buyers are being far more cautious before they offer but likewise sellers are beginning to feel that they are in a stronger position than they were a few months ago." 

HouseSimple

Alex Gosling, CEO of online estate agents HouseSimple, said, "Yet again, the UK property market has shown itself to be resilient – if not entirely impervious – to macroeconomic headwinds. What this stable growth does reveal is a degree of equilibrium between buyers and sellers."Buyer enquiries might be down and mortgage approvals are at a near two-year low, but a sluggish construction sector is continuing to cause a supply-side deficit."It's been near-on impossible to call how the market would ride out of the summer lull. Brexit has continued to confound commentators and homeowners, and the government's packages of taxes for second home buyers further muddied the water."The September figures might not be scintillating, and do little to expel the 'clouded' outlook called by Nationwide last month, but at the same time they are more positive than many predicted."* More than 40,800 additional properties have passed the £1 million price mark so far this year, according to a Zoopla survey. The vast majority of the 660,900 homes across the country now valued at £1 million-plus are in London and SE England.

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