United Kingdom: House prices dip in August
August 30, 2017
According to the Nationwide Building Society (NBS), house prices in the United Kingdom dipped 0.1% in August compared to the previous month in seasonally adjusted terms, contrasting July’s revised 0.2% rise (previously reported: +0.3% month-on-month). On an annual basis, house prices rose 2.1% in August, down from 2.9% in July. The average house price in August was GBP 210,495 (August 2016: GBP 206,144).
The cooling housing market is consistent with the slowdown in the wider economy, with GDP growth in the second quarter half that seen in Q2 2016 and retail sales growth dropping markedly since the start of the year. In addition, the number of mortgages approved came in at the lowest level in nine months in June, and recent anecdotal evidence points towards lower buyer enquiries. However, feeble supply and near record-low mortgage rates continue to put a floor under prices.
Looking ahead, the housing market is likely to remain fairly soft, as growth for the economy as a whole will be dampened by weaker consumer spending and Brexit uncertainty deterring investment. At the same time, the longstanding problem of a lack of supply is unlikely to disappear any time soon, which should prop up prices and lead to a mild price rise for 2017 as a whole.
Author: Oliver Reynolds, Economist