House prices rise, but property market remains unstable
This August saw a slight increase in house price growth in the UK according to Nationwide, however the outlook is still “clouded”.
According to the latest House Price Index from the building society, prices rose by 0.6% compared to the previous month and annual house price growth is up to 5.6% as opposed to 5.2% in the previous month, making average house prices of £206,145.
Despite the growth, the Chief Economist at Nationwide, Robert Garder, said: “The pick up in price growth is somewhat at odds with signs that housing market activity has slowed in recent months.” The Bank of England figures back up this statement. Their figures indicate that the number of mortgages approved by banks and building societies in July was at its lowest for a year and a half. However, Nationwide added while buyer demand had slowed down, the number of new properties coming on the market had also slowed down. That has kept the balance of demand and supply in check, which in turn has kept prices higher.
So what does that mean for the future of the property market? “What happens next on the demand side will be determined to a large extent, by the outlook for the labour market and confidence amongst prospective buyers.
“It is encouraging that the unemployment rate remained at a ten-year low in the three months to June, though labour market trends tend to lag developments in the wider economy. It is also positive that retail sales increased at a healthy rate in July, up almost 6% compared to the previous year, even though consumer confidence fell sharply during the month,” Gardner commented.
Nonetheless, he continues: “However, business surveys suggest that the manufacturing, services and construction sectors all slowed sharply in July, and, if sustained, this is likely to have a negative impact on the labour market and household confidence.
“Most forecasters, including the Bank of England, expect the economy to show little growth over the remainder of the year. Indeed, these concerns prompted the Bank’s Monetary Policy Committee (MPC) to implement a range of stimulus measures at the start of August, which will provide support to economic activity and the housing market.”
Written by: The Team | On: August 31, 2016