Annual house price growth slows to four-year low: Nationwide

House prices saw a second consecutive monthly decline in April causing annual growth to fall to 2.6% - its weakest pace for almost four years, according to the latest Nationwide house price index.

Related topics:  Finance News
Rozi Jones
28th April 2017
decline graph chart down decrease drop

Robert Gardner, Nationwide's Chief Economist, said: “In some respects, the softening in house price growth is surprising because the unemployment rate is near to a 40-year low, confidence is still relatively high and mortgage rates have fallen to new all-time lows in recent months.

“While monthly figures can be volatile, the recent softening in price growth may be a further indication that households are starting to react to the emerging squeeze on real incomes or to affordability pressures in key parts of the country.

“It is too early to conclude whether the slowdown in house price growth is merely a blip, a reflection of the impact of the squeeze on household budgets, or is due to mounting affordability pressures in key areas of the country.

“Given the ongoing uncertainties around the UK’s future trading arrangements and the upcoming election, the economic outlook is unusually uncertain, and housing market trends will depend crucially on developments in the wider economy.

“Nevertheless, in our view, household spending is likely to slow in the quarters ahead (along with the wider economy) as rising inflation increases the squeeze on household budgets. This, together with mounting housing affordability pressures, is likely to exert a drag on activity and house price growth in the quarters ahead.

“However, the subdued level of building activity and the shortage of properties on the market are likely to provide support for prices. As a result, we continue to believe that a small increase in house prices of around 2% is likely over the course of 2017 as a whole.”

Alex Gosling, CEO of HouseSimple, added: "It was widely predicted this would be a difficult year for the property market and that prediction seems to be borne out by these latest numbers.
 
"If we were seeing a house price growth soften during a traditionally quiet period for buying and selling then this could be overlooked, but we are now bang smack in the middle of the Spring market when we expect to see activity pick up.
 
"We do have to remember though that the market has faced the invoking of Article 50 and now a snap General Election. People's buying and selling decisions are underpinned by confidence, and at the moment they are facing a huge amount of uncertainty with is inevitably going to dent confidence.
 
"There's every chance the market will cool further in May as buyers and sellers hold off making a decision until after June 8. But then it's very likely we will see a late Spring bounce after the election result, which unless Labour pull off the steal of the century will see Conservatives remain in power. That should provide a timely boost of confidence to the housing market.
 
"We need to remember that two months of negative price growth doesn't constitute a property crash. A lack of supply is still supporting prices and mortgage rates remain extremely low. This feels like the property market has hit a minor bump in the road, not driven off a cliff."

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