United Kingdom: Housing market continues to lose steam in May
May 31, 2018
According to the Nationwide Building Society (NBS), house prices in the United Kingdom fell 0.2% in May compared to the previous month in seasonally adjusted terms, contrasting April’s 0.1% increase and marking the third month-on-month price decline so far this year. On an annual basis, house prices rose 2.4% in May, down from April’s 2.6% and coming in below market expectations. The average house price in May was GDP 213,618 (May 2017: GBP 208,711). May’s tepid result comes against a backdrop of sluggish economic growth and pessimistic consumer sentiment.
Going forwards, house prices are likely to continue to increase at a mild rate, underpinned by tight supply. In addition, a gradual recovery in real wages could support demand. Monetary conditions will be another key determinant of the evolution of prices. Although the Bank of England kept rates constant at its May meeting, our panelists continue to expect a rate hike this year, which would have a knock-on effect on borrowing costs.
Author: Oliver Reynolds, Economist