House price growth at 14 month low
According to the latest research, the annual rate of house price growth has fallen to the lowest level since November 2015.
The Nationwide data indicated that in January, the annual growth slipped to 4.3%, down from December’s rate of 4.5%. On a monthly basis, the rate grew by just 0.2%, following the December rise of 0.8%.
Commenting on the uncertainty surrounding the housing market was Robert Gardner. The chief executive of Nationwide also highlighted that growing inflation and weaker investment may cause the market to soften in 2017.
“The outlook for the housing market remains clouded, reflecting the uncertainty surrounding economic prospects more broadly,” Gardner said.
“On the one hand, there are grounds for optimism. The economy has remained far stronger than expected in the wake of the Brexit vote. However, there are tentative signs that conditions may be about to soften.
“The economy is likely to slow through 2017 as the squeeze on household budgets intensifies and heightened uncertainty weighs on business investment and hiring.”
During 2017, Nationwide forecast that house price growth will fall from 4.5% to 2%.
The chief UK economist at HIS Markit, Howard Archer, stated that a progressive deterioration in the climate for home buyers was likely.
As a result of the weakened pound following June’s EU referendum outcome, inflation has already begun to grow as imports become more expensive. In December, the headline UK rate of inflation rose to 1.6% from November’s 1.2%. In the next few months, it is expected to grow by around 3%.
The biggest real house price gains, when comparing speed growth to that of general goods and services, occurred during the 2000s according to Nationwide.
Gardner highlighted the reasons behind this strong period of growth as well as commenting on future trends.
“These increases were spurred by a combination of strong and stable economic growth, a structural decline in interest rates and the further liberalisation of the financial system.
“In the decades ahead, real house price trends will continue to depend crucially on developments in the wider economy, though there is an even greater degree of uncertainty around this than usual.”