House price growth slows for the third month in a row
House prices in the UK slowed for the third consecutive month in November, but housing market insiders were quick to dismiss suggestions that the UK is set to experience a sustained fall in house prices.
The average house price rose by 0.3% in November (compared to 0.5% in October, and a drop of 0.2% in September), taking the average price of a home to £189,388.
Robert Gardner, Nationwide's chief economist, said: "Housing market activity levels have remained relatively weak in recent months." But he added: "There is something of a disconnect between the slowdown in the housing market in recent months and broader economic indicators, which have remained relatively upbeat."
He argued that a strengthening labour market, increased consumer confidence (as evidenced by sales of new cars and retail sales growth) and consistently low mortgage rates point to activity picking up in the months ahead.
This was echoed by Mark Harris, chief executive of mortgage broker SPF Private Clients, who added: "Assuming interest rates don't rise for the foreseeable future, and [Bank of England governor] Mark Carney himself has indicated that we are looking at the fourth quarter of next year at the earliest, low mortgage rates will continue to support the market.
"Once the uncertainty created by a general election is out of the way, it could be full steam ahead once more for the housing market as all that pent-up demand is released."
The annual rate of house price growth now stands at 8,5% – the lowest rate of growth since December 2013 and well below the recent peak of 11.8% seen in June 2014.
Data out earlier this week from the British Bankers Association showed that mortgage approvals for house purchases fell for the fourth month in a row – to a 17-month low of 37,076 in October. Meanwhile, mortgage approvals in October were a whopping 23.8% down on January’s 76-month high of 48,649.
But Howard Archer, chief European and UK economist at HIS Global Insight, said the November figures were "fully consistent with our view that house prices will keep on rising but at a more restrained rate."
He added: "With housing market activity appreciably off its early-2014 highs, we suspect house prices will generally rise at a much more sedate rate over the coming months compared to the peak double-digit annual growth rates seen earlier this year.
"Specifically, we expect house prices to rise by around 5% in 2015 after a likely modest overall increase in the fourth quarter of 2014."