Outlook for house price growth 'clouded' despite steady start, says Nationwide

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House price growth got off to a steady start in 2017 but the outlook remains "clouded", according to an index.

Property values edged up by 0.2% month-on-month in January, following an 0.8% increase in December, Nationwide Building Society said.

The annual pace of price growth also slowed, with a 4.3% rise in January, compared with 4.5% in December. The year-on-year increase was the slowest in 14 months.

The average UK house price stood at £205,240 in January.

Robert Gardner, chief economist at Nationwide, said annual price growth had remained "broadly stable at the start of 2017".

But he said: "The outlook for the housing market remains clouded, reflecting the uncertainty surrounding economic prospects more broadly.

"On the one hand, there are grounds for optimism. The economy has remained far stronger than expected in the wake of the Brexit vote.

"Recent data indicates that the economy didn't slow in the second half of 2016 and the unemployment rate remained stable at an 11-year low in the three months to November."

But he said there are tentative signs that conditions may be about to soften.

"With inflation set to rise further in the months ahead as a result of the weaker pound, real wages are likely to come under further pressure.

"Employment growth is also likely to continue to moderate, should the economy slow as most forecasters expect."

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said that there has been a "little bit more optimism in the market" in terms of sentiment but still not enough supply.

He said: "The result is a steady, more balanced market where prices are likely to be more sensitive in areas which overheated previously."

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "Record low mortgage rates are largely responsible for much of the resilience we have seen in the housing market, with many borrowers taking advantage of some of the cheapest rates ever.

"We expect this to continue during the spring with lenders showing encouraging signs of wanting to do business by cutting rates further."

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The muted rise in house prices reported by the Nationwide ties in with our view that house price gains over 2017 will be no more than 3%.

"We suspect that housing market activity and prices will come under increasing pressure as 2017 progresses from weakening fundamentals."