The annual house price growth in the UK during August was 2017, according to the latest House Price Index released by Nationwide.
The average price of a UK house now is £210,495 as against £206,145 during the corresponding period of 2016. In August 2016, the annual house price growth was twice at 5.6 per cent. The August 2017 statistics indicate that the house prices in the UK are finally moderating. This could be a welcome relief for potential house-buyers, who were worried about the price inflation.
Nevertheless, constrained supply is likely to continue to provide support for house prices. The stock of homes on estate agents’ books remains close to 30-year lows and the number of new homes coming onto the market remains subdued. As a result, Nationwide expects prices to rise by around 2 per cent over 2017 as a whole.
Ultimately, housing market developments will depend on wider economic performance. The UK economy slowed noticeably in the first half of the year, and there has been little to suggest a significant rebound in the months ahead. While employment growth has remained robust, household budgets are under pressure. This suggests that housing market activity will remain subdued.
Wages have been failing to keep up with the cost of living in recent months and consumer sentiment has weakened. While measures of housing affordability are not particularly stretched at a UK level, pressures are evident in some regions – especially London and the South of England.
Robert Gardner, Nationwide's Chief Economist, said: “The annual pace of house price growth moderated to 2.1% in August, from 2.9% in July. The slowdown in house price growth to the 2-3% range in recent months from the 4-5% prevailing in 2016 is consistent with signs of cooling in the housing market and the wider economy. "