Average UK house price reaches £211,671 in July, according to Nationwide
2017 house price growth expected to be just 2% down from 5.2% last year
‘Balance in the market is shifting a little further towards buyers’, says Nationwide
House prices will rise by just 2 per cent this year to fall behind inflation and deliver a buyers’ market, building society Nationwide forecast today.
In a further sign of the sluggish property market, Nationwide said that while house prices had continued to grow throughout 2017, it had been at a slower pace than in previous years, with prices up just 2.9 per cent on a year ago in July.
Robert Gardner, chief economist at Nationwide suggested that a buyers’ market could be around the corner though a lack of homes for sale is helping prop up current house price growth.+4
Enough for sale? Relatively few properties are coming onto the market, bolstering prices
The 2 per cent forecast for 2017 revises down earlier expectations and compares to 5.2 per cent property inflation in 2017.
Gardner said: ‘Survey data point to relatively sluggish levels of new buyer inquiries, but at the same time surveyors report that relatively few properties are coming on to the market.’
He added: ‘While employment growth has remained relatively robust, household budgets are coming under pressure as wage growth is failing to keep up with the rising cost of living.’
‘This suggests that housing market activity is likely to remain subdued, with the balance in the market shifting a little further towards buyers in the quarters ahead.’
Nationwide’s index showed house prices rose by 0.3 per cent in July, up just £370 to £211,671 on average.
House price rises continue to outstrip wages, however, with the struggle for buyers to afford increasingly expensive homes weighing on the market.
The buyer of the average home needs to find some some £5,956 more than a year ago, according to Nationwide. Its data shows that homes have only been more expensive compared to wages at the peak of the 2000’s boom.
Higher and higher: Despite a slowdown, UK house prices continue to hit record levels, according to Nationwide’s index
Nationwide’s chart shows that homes have only been more expensive compared to wages at the peak of the 2000’s boom
Jeremy Leaf, a north London estate agent and a former Royal Institution of Chartered Surveyors chairman, said: ‘Although these figures on the face of it look quite encouraging, when one considers the fall in transactions, it is clear that prices are being supported by a lack of property on the market.‘
Despite high prices, first-time buyer numbers have been on the rise over the past 18 months, as they take advantage of lower mortgage rates and a decline in buy-to-let purchases after the 3 per cent stamp duty surcharge was added for anyone buying a second or additional property, in April 2016.
Shifting demographics of buyers and sellers could present an opportunity for first-time buyers to get on the property ladder, with landlords making fewer transactions.
Record lows: Fewer properties for sale is keeping prices ticking upwards, says Nationwide
The very best and cheapest mortgage deals on offer remain for those with big deposits or substantial equity in their homes, but there are competitive rates across the board even for those with just 10 or 5 per cent deposit.
Brian Murphy, head of lending at Mortgage Advice Bureau said: ‘The mix appears to be changing with landlords transacting less frequently – or indeed divesting their portfolios in some cases – due to the tax changes.’
This has left an opportunity for first time buyers who would normally be competing for the same type of property with an investor.
He added: ‘Now we’re seeing more first time buyers getting on the ladder, which is of course great news as they underpin the rest of the market, so it’s possible to suggest that this particular trend, which has been emerging since the beginning of this year, could ripple through to the rest of the market in months to come.’