House price growth weakest since 2013

Bricks building housing construction

The rate of growth in UK house prices has dipped to its lowest level since June 2013, according to figures from Nationwide.

The building society’s housing index reveals the annual pace of growth dropped from 3.5 per cent to 3.2 per cent. Prices increased 0.3 per cent in August compared to a 0.4 per cent rise in July.

Nationwide chief economist Robert Gardner says: “This month’s data provides further evidence that annual house price growth may be stabilising close to the pace of earnings growth, which has historically been around 4 per cent.

“However, survey evidence cautions that this trend may not be maintained unless construction activity accelerates. Surveyors reported the lowest ever number of properties on their books in July (on data extending back to the late 1970s) whilst new buyer enquiries picked up.”

The average value of a house was £195,279, Nationwide says, marginally down from £195,621 last month.

UK house prices remain 5 per cent above pre-crisis levels, while prices elsewhere in Europe remain significantly down.

In Ireland and Spain, prices are down 38 per cent and 36 per cent, respectively, while prices are down 18 per cent in the Netherlands.

Gardner says the strength of the UK market shows a correlation between employment and house prices since the crisis, with countries where employment remains down also showing lower prices.

“The UK experienced a much smaller increase in building activity in the run up to the financial crisis. As a result, there was much less of an overhang of unsold properties to be worked off in recent years,” he adds.

“However, with UK house building running well below the expected rate of household formation in recent years and with demand for homes rising, a significant increase in construction activity is required if affordability is not to become stretched in the years ahead.”