UK house prices stuck in low gear amid pressure on incomes

LONDON: UK house-price growth remained stuck in a relatively slow gear at the start of the fourth quarter, Nationwide Building Society said.

Values increased 0.2% from September and were up 2.5% compared with a year earlier.

The annual change – within the range seen for much of this year – is about half the pace seen in 2016.

“Low mortgage rates and healthy rates of employment growth are providingsome support for demand, but this is being partly offset by pressure on household incomes, which appears to be weighing on confidence,” said Nationwide chief economist Robert Gardner.

Uncertainty surrounding Brexit and stretched valuations have dealt a blow to the housing market, with London particularly hit.

Multiple reports point to a slowdown, with on an e-survey last month saying values in the capital are falling at the fastest annual pace since the financial crisis.

Property demand could take a further hit this week if the Bank of England presses ahead with a well-flagged interest-rate increase. While the hike will only be 25 basis points, it will be the first in more than a decade and buyers could be deterred if they think there is more to come.

Homebuyers and mortgage holders are already getting their finances in order before the expected rate hike.

The prospect of higher borrowing costs has lifted demand for five-year fixed mortgage deals to a record, according to property services firm LMS said.— Bloomberg