Nationwide confirms slower house price growth

29/08/07

There are “clearer signs” of a slowdown in the housing market, according to the latest survey from Nationwide.

The building society’s House Price Report for August says that the average house price fell from £184,270 to £183,898 during the month. However, the report’s calculation of house price inflation takes into account the seasonal pattern in prices, and the seasonally-adjusted price index posted a 0.6% increase.

Nationwide says that the annual growth rate in house prices has reached its lowest rate since March, having fallen from 9.9% in July to 9.6% in August. Earlier this week, figures from the Land Registry and Hometrack indicated that house prices were static or growing very slowly.

Chief economist at Nationwide Fionnuala Earley said that the annual growth in house prices still looked likely to be 6% by the end of 2007, within the building society’s longstanding forecast of 5-7%.

“The expected slowing results from three main factors, each of which have been around for some time. First, weaker affordability, as house prices continue to grow more quickly than earnings; second the effect of higher interest rates and inflation on consumers’ pockets; and third lower house price expectations.”