Nationwide’s property figures for October show the first decline in prices for three years.
The average house price fell by 0.4 per cent in October to 152,159 from 153,727 in September, the first mon-thly fall since October 2001.
As a result of the fall, the annual rate of house price inflation slowed from 17.8 per cent to 15.3 per cent.
If prices remain as they are for the rest of the year, the price of an average UK property will end the year 12 per cent up on 2003 but 3 per cent below Nationwide’s forecast made in March 2004 and 3 per cent higher than the level forecast in Dec-ember 2003.
Nationwide says one of the factors contributing to the slowdown is the deterioration in affordability for first-time buyers and existing homeowners.
Another factor appears to be less demand from buyto-let investors who are diss-uaded by low rental yields and possible limited future capital growth. Despite the level of private rented stock increasing by 8,000, the number of outstanding buyto-let mortgages increased by 100,000 over the same period from 233,000 in the first half of 2002 to 333,000 a year on.
Group economist Alex Bannister says: “Our view is that the current moderation in price growth expectations will not translate into widespread panic and instead the market will experience subdued levels of turnover and price growth.”