UK house price growth slowed in August, despite the strength of the jobs market and record low mortgage rates.
According to the latest Nationwide house price index, annual house price growth fell from 2.9% in July to 2.1% in August.
Monthly house prices fell for the first time since May, down from 0.1% to £210,495.
Nationwide said the slowdown was “consistent with signs of cooling in the housing market and the wider economy”.
The number of mortgages approved for house purchase moderated to a nine-month low of 65,000 in June.
Robert Gardner, Nationwide’s chief economist, said: “It may be that mounting pressure on household finances is exerting a drag. Wages have been failing to keep up with the cost of living in recent months and consumer sentiment has weakened. While measures of housing affordability are not particularly stretched at a UK level, pressures are evident in some regions – especially London and the South of England.
“In some respects the slowdown in the housing market is surprising, given the ongoing strength of the labour market.”
The economy created 125,000 jobs in the three months to June and the unemployment rate fell to 4.4% – the lowest rate for over forty years.
Mortgage rates have also been at record lows.
Gardner said that housing market developments will ultimately depend on wider economic performance.
“The UK economy slowed noticeably in the first half of the year, and there has been little to suggest a significant rebound in the months ahead. While employment growth has remained robust, household budgets are under pressure. This suggests that housing market activity will remain subdued,” said Gardner.
“Nevertheless, constrained supply is likely to continue to provide support for house prices. The stock of homes on estate agents’ books remains close to 30-year lows and the number of new homes coming onto the market remains subdued.”
Despite the slowdown in the housing market Nationwide still prices to rise by around 2% over 2017 as a whole.
