UK House Price Inflation Slows In August: Nationwide

UK August House Prices Fall 0.1% m/m; Up 2.1% On Year

     LONDON (MNI) - UK house price inflation slowed in August, with both the

monthly and annual pace of annual inflation decelerating from July's rate, data

released Tuesday showed.

     House prices fell 0.1% on month in August, with the year-on-year rate

falling to 2.1% from 2.9% previously. 

     "The annual pace of house price growth moderated to 2.1% in August, from

2.9% in July. The slowdown in house price growth to the 2-3% range in recent

months from the 4-5% prevailing in 2016 is consistent with signs of cooling in

the housing market and the wider economy," 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," he added.

     Gardner was unsure if this was the start of a new trend, or if it reflected

volatile monthly data.

     "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.

     "Ultimately, housing market developments will depend on wider economic

performance," he said.

     However, Gardner noted that the continued squeeze on supply could remain a

supporting pillar for prices.

     "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. As a result,

we continue to expect prices to rise by around 2% over 2017 as a whole," he

said.

     Nationwide, like the majority of forecasters, are predicting slower UK

economic growth in 2017, and this could hit house price inflation, but only

marginally.

"While employment growth has remained relatively robust, household budgets are

coming under pressure as wage growth is failing to keep up with the rising cost

of living," he added.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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