UK House Price Inflation Slows In July: Nationwide

UK June House Prices Up 0.3% m/m; Up 2.9% On Year

     LONDON (MNI) - UK house price inflation slowed in July, with the pace of

annual inflation also decelerating from June's rate, data released Tuessday

showed.

     House prices rose 0.3% on month in July, with the year-on-year rate up to

2.9% from 3.1% previously. 

     "The annual pace of house price growth remained broadly stable in July at

2.9%, only a touch lower than the 3.1% recorded in June.

"On the surface, this appears at odds with recent signs of cooling in the

housing market. The number of housing transactions dipped to their lowest level

for eight months in June, while in the same month the number of mortgages

approved for house purchase moderated to a nine-month low of c.65,000," Robert

Gardner, Nationwide's Chief Economist, said

     "The emerging squeeze on household incomes appears to be exerting a drag on

housing market activity in recent months. The number of mortgages approved for

house purchase has slowed a little in recent months and surveyors report that

new buyer enquiries have softened," he added.

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

volatile monthly data.

     "A lack of homes on the market appears to be providing support, with annual

house price growth remaining only just outside the 3-6% range, that has been

prevailing for most of the past two years," 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.

     "Ultimately, housing market developments will 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 departure from recent trends in

the quarters ahead," Gardner said.

"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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