House price growth slowed in September following a softening in demand, new figures show.
According to the latest Nationwide House Price Index, the average price of a home increased by 0.3% in August to £206,015. This was half the 0.6% rise in August.
The annual rate of house price growth fell from 5.6% in August to 5.3%.
House price growth has progressively slowed following April’s stamp duty hike after buyers brought forward transactions to beat the deadline.
The housing market has also been hit by uncertainty over the impact of the EU referendum, with many buyers adopting a more cautious approach and putting off purchases.
Robert Gardner, Nationwide’s chief economist, said: “The relative stability in the rate of house price growth suggests that the softening in housing demand evident in recent months has been broadly matched on the supply side of the market.
“Survey data indicates that while new buyer enquiries have remained fairly subdued, the number of homes on the market has remained close to all-time lows, in part due to low rates of construction activity.
Nationwide said that while the number of new homes built in England has picked up, it is still not sufficient to keep up with the expected increase in the population.
In the year to June, 139,000 new houses were completed, 30% higher than the low point seen in 2010. However, this is still around 15% below the average rate of building in the five years before the financial crisis and 38% below the 225,000 needed each year.
“The major housebuilders appear to have capacity to expand output, with most reporting land banks that could support around five years’ worth of construction at current rates of building activity. However, there is a risk that the uncertain economic outlook may weigh on activity in the period ahead, said Gardner.
Andrew McPhillips, chief economist at Yorkshire Building Society, said: “Although house prices are showing stable growth, they are still rising faster than people are able to afford on an annual basis. For the bulk of the country the referendum outcome has had no discernible impact and it remains to be seen whether the process of negotiating an exit from the EU will affect confidence.
The latest data from the Bank of England shows that mortgage approvals for house purchases weakened to a 21-month low of 60,058 in August.
Ishaan Malhi, CEO and founder of Trussle, said: “This slowdown in price growth is good news for buyers, especially as last month’s cut to the Bank of England base rate means we’re now seeing some of the lowest mortgage rates in history. Cheaper borrowing is making home ownership more affordable for those in a position to put down a deposit and lock in these low rates, so it’s important people do their due diligence, shop around, and choose a lender that’s passing on the full benefit of the rate cut to its borrowers.”
Loading ...