House price inflation at 10-month low

November saw the annual rate of house price growth fall to a 10-month low of 4.4%. This is a dip of 0.2% in comparison with November 2015, where the rate was at 4.6%.

House prices had however, moved up by 0.1% on a seasonally adjusted basis, in comparison with October. Since June of last year, October marked the first time where house prices did not rise.

Commenting on the increased demand during economically uncertain times was Robert Gardner. The chief economist at Nationwide stated: “There are some signs that, despite the uncertain economic outlook, demand conditions have strengthened a little in recent months, reflecting the impact of solid labour market conditions and historically low borrowing costs.

“Mortgage approvals increased in October, and surveyors report that new buyer enquiries have increased modestly.”

Nationwide’s house price index is based on the mortgage offers of lenders. It comes after the report which was released earlier this week from the Bank of England, which showed that house purchase approvals increased to 67,518 in October – a 7 month high. This was also a rise of 6% from August.

Mr Gardner also commented on the lower rates of housing construction and reduced number of homes on the market meaning supply is unable to keep up with demand, regardless of the economic conditions.

According to analysts however, declining consumer confidence and purchasing power has contributed to the uncertainty surrounding the referendum result and could damage 2017’s housing market.

The chief UK economist at Pantheon Macroeconomics, Samuel Tombs, commented on the market’s weakened acceleration: “Looking ahead, the likely stagnation of households’ real incomes in 2017, after a 3% or so year-over-year increase this year, will drain momentum from the market.

“We expect house prices to rise by just 2% next year.”

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