House prices are falling at fastest rate for six years
‘Blanket of uncertainty’
HOUSE prices are falling at their fastest pace in six years, figures show.
Subdued demand saw prices dip 0.5 per cent from July to August.
The average property value fell by nearly £ 2,300 to £ 214,745, according to Nationwide.
The building society said the monthly decline in prices was the biggest since July 2012, when London hosted the Olympics.
It is the latest sign the market is running out of steam.
Plummeting prices in London are thought to be driving the overall decline, with official figures earlier this month showing prices in the capital were falling at the fastest rate since the financial crisis.
Yesterday Nationwide said house price growth for the twelve months to August across the whole of the UK was slower than expected. While prices rose by 2 per cent, they fell short of predictions of 2.7 per cent.
Robert Gardner, the building society’s chief economist, said: ‘Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on house price growth and market activity this year, though borrowing costs are likely to remain low.’
He said house prices were still expected to rise by around 1 per cent overall during 2018.
But Howard Archer, chief economic adviser at EY Item Club, said the dip in August showed a rise in the previous month was a ‘false dawn’. He said: ‘We suspect any meaningful housing market upturn will remain elusive over the coming months.
‘The fundamentals for housebuyers are likely to remain challenging – and they will not be helped by the Bank of England hiking interest rates.’
Jonathan Samuels, of Octane Capital, said there was ‘a blanket of uncertainty’ over the housing market. He said factors such as inflation, overstretched household finances and a potential no-deal Brexit, were creating ‘ serious doubt’ in the mind of buyers.
Economists predicted prices would fall this year and next year in a Reuters poll, with a third saying they expected a crash.
Estate agents have claimed the housing market has been propped up by the Government’s Help to Buy scheme, which gives taxpayer-funded loans to families buying homes. Sales of homes using the scheme rose by more than a fifth in the year to March. More than a third of newly-built homes were snapped up by families using the scheme in the past year, Nationwide said. Mr Gardner added: ‘It is unclear how much Help to Buy activity represents additional demand and how much has simply replaced activity that would already have taken place.’
Reuben Young, a spokesman for housing campaign group Priced Out, dismissed the monthly fall – saying the dream of home owner- ship remained out of reach for many families. He said: ‘We have been in a housing bubble for some time but this stall in house price inflation doesn’t necessarily mean it’s about to burst.’
A report by the Office for National Statistics and the Land Registry published earlier this month showed overall UK house prices had only risen by 3 per cent or £6,714 to £228,384 in the 12 months to June – the slowest increase in five years. The biggest slowdown was in London.