Property prices in the UK have been in the news quite frequently as pressure on household budgets and a slow economy have caused the average property price to fall month-on-month. Now, new figures from Nationwide show that property prices fell by 0.2% month-on-month in May 2018, representing the third fall in four months. Annual growth also fell from 2.6% in April to 2.4%.
According to Nationwide’s figures, the average house price was £213,618 in May 2018 when not seasonally adjusted, compared to £213,000 in April 2018. The figures from Nationwide back up earlier figures from the Office for National Statistics which show that the slowdown in the UK’s property market is being driven by very poor market conditions in London. The figures from the Office for National Statistics show that house prices across the UK fell in March, with London recording its weakest performance since 2009.
Experts believe the decline in London is down to stamp duty changes and the Brexit vote, which are causing net migration amongst foreign investors to all, while foreign buyers are rethinking their investment in the capital and instead invest in other cities across the world.
Nationwide’s chief economist Robert Gardner has said that there are very few signs of an imminent change in the UK’s property market. He added that surveyors are continuing to report subdued levels of buyer inquiries, while the supply of properties for sale on the market continues to be well below levels seen a few years ago. He concluded by saying that the future of the UK’s property market will be heavily influenced by how broader economic conditions evolve, especially the labour market and the Bank of England’s interest level.
The chief economic adviser at EY Item Club, Howard Archer, also added that the housing market in the UK is clearly struggling to gain any traction and that any upturn in fortunes will remain elusive over the foreseeable months. He also said that the fundamentals for property buyers are likely to continue to be challenging due to the continued serious squeeze on purchasing powers felt by consumers which is only now starting to ease. He concluded that the UK’s housing market activity remains hampered by consumers’ lack of confidence and unwillingness to partake in any major transactions.
The chief UK economist of Pantheon Macroeconomics added that it is very unlikely that the near-flat trend in property prices will improve soon. He said that the mortgage rate increases in April will continue to increase over the coming months too as the Bank of England only delayed interest rate increases, and didn’t scrap them.
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