House price growth subdued in August: Nationwide – Mortgage Strategy

UK annual house price growth remained broadly stable in August at 1.6%, with house prices up 0.2% month on month, according to the latest house price index from Nationwide.

Commenting on the figures, Nationwide’s chief economist   Robert Gardner said market activity and house prices had remained subdued in recent months, in part reflecting the uncertain economic backdrop. Geopolitical tensions remained high, with the conflict in the Middle East exerting upward pressure on energy prices and market interest rates.

“Market expectations of the future path of Bank Rate have been volatile. While the latest energy price shock poses inflation risks, there have been encouraging signs that it is not feeding through to underlying price pressures.

“Indeed, private sector wage growth has eased further in recent months, which should give policymakers breathing space to assess the extent to which tighter policy is necessary to ensure inflation returns sustainably to target.”

He added: “Underlying affordability is improving, as house price growth remains well below earnings growth. although some of these gains have been offset by higher mortgage rates. Nevertheless, this suggests that activity should regain momentum in the quarters ahead providing the energy shock wanes and confidence returns, especially if market interest rates fall back towards pre-conflict levels.”

Richmond estate agency Antony Roberts head of sales Amy Reynolds commented:  “On the ground, we are seeing prices remain flat with sensible offers being accepted. There are more sellers than buyers, but sellers aren’t panicking – asking prices are coming down, but a lot of that is due to initial overpricing meeting the time it takes to find the market level.”

She added: “We are seeing a bit of competition over certain new instructions, but when it comes to smaller flats there remains more supply than demand. However, over the summer we have agreed more flat sales, and it feels as though there is some life in this market.”

“Hopefully, the market will continue to gather momentum as we move into autumn and doesn’t prematurely slowdown in advance of the Budget, as was the case last year. As for the Budget, it should focus on the property market’s recovery, so that people feel confident enough to move.”

SPF Private Clients chief executive  Mark Harris said: “Flat monthly house prices indicate that those focused enough to buy over the summer months were not willing or perhaps able to pay over-the-odds but took advantage of the buyers’ market and negotiated accordingly.

“Lenders mostly continue to trim their mortgage rates, while the Bank of England’s steady approach to base rate is conveying calm after a period of Swap rate volatility.

He added: “Borrowers are taking nothing for granted though as the continued high cost of living strains affordability. Many are taking the sensible approach of locking into mortgage rates several months before they need them for peace of mind.”