United Kingdom: Housing market remains tepid in September
September 30, 2018
According to the Nationwide Building Society (NBS), house prices in the United Kingdom rose 0.3% in September compared to the previous month in seasonally adjusted terms, contrasting August’s 0.5% decline. On an annual basis, house prices rose 2.0% in September, matching August’s figure. The average house price in September was GBP 214,922 (September 2017: GBP 210,801). The overall housing market picture was little changed; annual price growth remained within the 2%-3% band which has prevailed over the last year. Looking at Q3 as a whole, the weak overall annual growth rate masks notable regional disparities; house prices in London declined for the fifth consecutive quarter, while regions further from the capital saw solid price growth.
Going forward, house prices are likely to continue to increase at a mild rate, underpinned by tight supply. In addition, a gradual recovery in real wages should support demand. However, pessimistic consumer sentiment will likely weigh on the market. Monetary conditions will be another key determinant of the evolution of prices. With the Bank of England raising rates at its August meeting, this will have a slight knock-on effect on borrowing costs.
Author: Oliver Reynolds, Economist