House prices continue annual slowdown – Nationwide

Property prices across the UK saw a slight slowdown last month, with annual growth easing to 2.1%, down from 2.4% in July, according to Nationwide’s latest figures.

It says the average house price is £271,079, reflecting a modest 0.1% month-on-month decline after seasonal adjustments.

This cooling trend matches what Halifax recently noted with an annual drop to 2.4% last month, from June’s 2.7%.

Zoopla says prices rose 1.3% over the same period, down from 2.1% earlier in the year, while e.surv says there was a 0.6% drop in average sale prices, marking six consecutive months of declines.

Price growth slow down

Robert Gardner, Nationwide’s chief economist, said: “The relatively subdued pace of house price growth is perhaps understandable, given that affordability remains stretched relative to long-term norms.

“House prices are still high compared to household incomes, making raising a deposit challenging for prospective buyers, especially given the intense cost of living pressures in recent years.”

He added: “Combined with the fact that mortgage costs are more than three times the levels prevailing in the wake of the pandemic, this means that the cost of servicing a mortgage is also a barrier for many.

“Indeed, an average earner buying the typical first-time buyer property with a 20% deposit faces a monthly mortgage payment equivalent to around 35% of their take-home pay, well above the long run average of 30%.”

Property sector reaction

Tom Bill, the head of UK residential research at Knight Frank, said: “House prices have drifted lower since March as the market digests higher rates of stamp duty and supply continues to outstrip demand.

“Steady mortgage rates mean transaction numbers have improved over that time but the recent property tax speculation risks sending both sales and prices lower as buyers and sellers deal with pre-Budget uncertainty for the second year in a row.”

Marc von Grundherr, director of Benham and Reeves, said: “August’s marginal dip is no surprise, with the school holidays always proving disruptive for buyers and sellers.

“However, this is nothing more than a seasonal summer slump as our plans to move take a backseat in favour of holidays and longer days spent in the sun with family and friends.

“Now that September has arrived it brings with it a greater degree of normality where our day-to-day routines are concerned and so we should see momentum return quickly, with greater consistency in both market activity and house price growth.”

Nathan Emerson, Propertymark‘s chief executive, said: “It is encouraging to see that house prices remain resilient at a time when the housing market has seen turbulence, very much influenced by the current economic backdrop.

“There are, however, many positive factors to reflect upon: we have witnessed a drop in the number of fall-throughs, a trend that demonstrates an uplift in the number of property transactions completed, and the number of overall listings reaching an all-time high.

“There are challenges ahead, however, such as increasing the supply of new sustainable homes, providing assistance to first-time buyers, and for lenders, ensuring that the latest drop in interest rates translates into more affordable mortgage products.”