United Kingdom: House prices tick up in September
September 29, 2017
According to the Nationwide Building Society (NBS), house prices in the United Kingdom rose 0.2% in September compared to the previous month in seasonally adjusted terms, contrasting August’s 0.1% decline. On an annual basis, house prices rose 2.0% in September, down from 2.1% in August. The average house price in September was GBP 210,116 (September 2016: 206,015).
According to the NBS, housing market activity has strengthened slightly in recent months, although it remains muted by historic standards. This is understandable given that consumer confidence remains firmly in negative territory and households’ budgets are being squeezed by high inflation and meager pay rises. Across the country, the regional differential in house price increases is narrowing, with price growth slowing in the traditionally strong-performing south of the country. Although there are concerns in some quarters over the impact an interest rate hike in the coming months could have on the housing sector, the NBS argues the effect will be mild. Monetary policy will still remain fairly supportive, with the Bank of England’s measures to support credit likely to continue.
Looking ahead, the housing market is likely to remain fairly limp, as growth for the economy as a whole will be dampened by weaker consumer spending and Brexit uncertainty deterring investment. However, the longstanding problem of a limited supply of homes 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