Slow growth continues to hit house prices as uncertainty reigns

Annual house price growth ran below 1% for the ninth month in a row in August as consumer confidence remains low, according to Nationwide Building Society.

The monthly index found that the average house price in August stood at £216,096 – slightly down on July’s average of £217,663, the study found.

House prices increased at 0.6% on an annual basis, with the strongest growth coming from properties close to transport hubs in major cities.

Robert Gardner, Nationwide’s chief economist, said: “While house price growth has remained fairly stable, there have been mixed signals from the property market in recent months.

“Surveyors report that new buyer inquiries have increased a little, though key consumer confidence indicators remain subdued.

“Data on the number of property transactions points to a slowdown in activity, though the number of mortgages approved for house purchase has remained broadly stable.

“Housing market trends will remain heavily dependent on developments in the broader economy.

“In the near term, healthy labour market conditions and low borrowing costs will provide underlying support, though uncertainty is likely to continue to exert a drag on sentiment and activity.”

He added that London home-buyers are paying greater premiums for being close to a station, compared with Manchester and Glasgow, with buyers in the capital paying an extra 9.4% to be within 500m of a station.

He said: “This probably reflects the greater reliance on public transport in the capital, with residents less likely to drive.

“London also has the densest network of stations and services, with 94% of properties within 1.5km of a station, compared with 72% in Glasgow (Strathclyde Partnership for Transport area) and 70% in Greater Manchester.

“Residents in Manchester are also willing to pay a significant premium to be near a station – 7.8% (£12,600 based on average prices in the region) to be within 500m and 3.3% (£5,300 extra) to be within a kilometre.”

Commenting on the data, Howard Archer, chief economic adviser at EY Item Club, pointed out that, despite the slight rise, this “may well be at least partly influenced by house-buyers looking to get their move sorted out before Brexit is due to occur on 31 October, given the major uncertainties as to what exactly will happen then”.

He added: “Improved consumer purchasing power and decent employment growth has also been supportive to the housing market, as have ongoing very low interest rates.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Despite political and economic uncertainty, the Nationwide house price index, along with other surveys, show that many people are getting on with things.

“There has been too much indecision and uncertainty for an extended period, and buyers and sellers can only wait so long while politicians sort themselves out.”