House prices in May 2015 remained almost unchanged month-on-month with just a marginal increase of 0.3 per cent from April, the latest data from Nationwide shows.
The annual rate of growth also slowed down in May, standing at 4.6 per cent, as compared to 5.2 per cent in April.
The average home price in May amounted to £195,166, while it was 193,048 in the previous month.
Commenting on the figures, Robert Gardner, Nationwide’s chief economist, said:
“The annual pace of house price growth slowed to 4.6% in May. This resumes the gradual downward trend that had been in evidence since the summer of 2014, which was briefly interrupted in April when price growth edged up to 5.2% from 5.1% in March. Annual house price growth is now running at less than half the pace prevailing in mid-2014.
“Over the longer term we would expect house price growth to converge with earnings growth, which has typically been around 4% per annum. However, much will depend on supply side developments – in recent years the rate of building activity has remained well below that required to keep up with population growth.”
Consumers confidence declines
The Halifax Housing Market Confidence Tracker for April, shows that consumers are less confident in the house price growth over the next year, with 63 per cent of them expecting a future rise in prices. This compares to 67 per cent in March.
However, optimism is expected to return soon thanks to factors such as the record-low mortgage rates, falling swap rates, negative inflation and the Bank of England’s Monetary Policy Committee’s assurance that the base rate will remain at 0.5 per cent. Employment is also increasing and the economy continues to grow although at a slower pace.
Craig McKinlay, mortgages director at Halifax, said:
“With inflation now at its lowest level since records began, unemployment falling, and the economy still growing, the fundamentals for the housing market remain positive. Going forward the key factor in how consumers adjust to any changes in rates will be the way in which they manage their disposable income.”
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