Arthur takes a look at the recent unexpected drop in UK house prices.
Nationwide have reported an unexpected dip in the property market which marks the weakest growth in 6 months. There has been a drop in house prices recorded in February due to the weaker economy and a squeeze on household incomes.
In February the average drop in prices fell by 0.3% to £220,402 , following a 0.8% rise in January. This comes as an unexpected drop, where annual rate of house price growth was 4.5% in 2017 compared to February this year which drove the annual rate down to 2.2%.
Robert Gardener, Nationwide’s chief economist said ”Month-t0-month changes can be volatile, but the slowdown is consistent with signs of softening in the household sector in recent months. How the housing market performs in the year ahead will be determined in a large part by developments in the wider economy and the path of interest rates. Brexit developments will remain a key factor, though these remain hard to foresee”.
”Subdued economic activity and the ongoing squeeze on household budgets is likely to exert a modest drag in housing market activity and house price growth.” he continued.
Nationwide is predicting a fall in house price growth to 1% in 2018, which is less than half the 2.6% in 2017- which is the lowest recorded growth in the last 5 years. Gardener says this is due to the low unemployment combined with shortage of properties which prevents the decrease in house prices.
However, the Bank of England published data showing the steepest rise in mortgage approvals in 3 years at the start of 2018. Howard Archer, chief economic advisor to EY item Club commented that the housing market is unpredictable around this time saying ” The stronger January Bank of England mortgage approvals data does little to dilute our belief that 2018 will be a difficult year for the housing market. Price gains over the year are likely to be limited to a modest 2%.”
Keep an eye out for Arthur’s blogs to uncover the latest property news!