Annual house price growth slowed to 2.4% in the UK in May 2018 and values are now expected to rise this year by just 1%, the latest national index shows.
This was down slightly from the 2.6% annual growth recorded in April and month on month prices fell by 0.2%, according to data from lender the Nationwide. It takes the average price of a home to £213,618.
Robert Gardner, Nationwide’s chief economist, pointed out that annual house price growth has been confined to a fairly narrow range of 2% to 3% over the past 12 months, suggesting little change in the balance between demand and supply in the market over that period.
‘There are few signs of an imminent change. Surveyors continue to report subdued levels of new buyer enquiries, while the supply of properties on the market remains more of a trickle than a torrent,’ he said.
He explained that subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low.
‘Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates. Overall, we continue to expect house prices to rise by around 1% over the course of 2018,’ he added.
The figures suggest that currently the property market lacks both momentum and direction, according to Jonathan Samuels, chief executive officer of property lender Octane Capital.
‘Tight supply and subdued demand are the key contributors to the ongoing limbo. Low stock levels and continued cheap borrowing rates will prevent a material decline in prices but equally a rise greater than very low single digits is highly unlikely,’ he said.
The market is in a period of prolonged stagnation and nothing will change that until a significant political or financial dynamic occurs, according to Murray S mith, managing director of SiteSales Property Group, a consultancy based in London and the South East of England.
‘Buyers are still erring on the side of caution due to wider market conditions as plenty of market availability prevents the need to rush decisions, and a consistent squeeze on household budgets. We could be witnessing a significant shift in the mindset of first time householders who are more comfortable with private renting than their parents,’ he said.
‘However, our own figures show a sustained appetite in the new build market where the product shows value for money to both investors and first time buyers, with the latter galvanised by popular schemes such as Shared Ownership and Help to Buy,’ he explained.
‘The market is precariously balanced with a huge reliance on financial assistance, be its source either Government or family funded. Take these away and the market would look very different indeed,’ he added.
