House prices drop marginally in September

In its monthly house price index, published today (30 September) Robert Gardner, chief economist of Nationwide, said as a result of the drop off in house prices this month, the annual pace of house price growth moderated to 9.4 per cent from 11 per cent in August.

But while September saw a slowing in house price growth, Mr Gardner said the picture on a quarterly basis for July, August and September combined was still relatively strong, with all thirteen UK regions recording annual price gains.

He said: “There remains significant regional variation however, with the south of England still seeing the strongest rates of growth.

“Annual house price growth in London slowed somewhat, from 25.8 per cent in the second quarter to 21 per cent in the third quarter. Nevertheless, at £401,072, average prices in the capital reached a record high, 31 per cent above their 2007 peak.

“In the UK as whole, prices are around 2 per cent above their pre-crisis peak (excluding London they are less than 1 per cent above their 2007 peak).”

Alex Gosling, managing director at online estate agents Housesimple, added: “It’s official - the market is cooling.

“September is typically a busier month for buyer activity than August and yet prices have fallen. But there’s no need to press the panic button just yet.

“Market fundamentals are strong, so this is likely to be a correction rather than the start of a sustained period of price falls.

“After more than a year of growth the housing market needed the brakes applied, but there’s nothing to suggest the market is in bad shape.

“Buyer activity is still healthy, supported by buoyant consumer confidence and competitive mortgage rates, but strong demand has been fuelled by a lot more second hand and new properties coming onto the market.

“Throw into the mix the prospect of interest rate rises on the horizon, and tougher lending conditions, and this drop off in price growth is not altogether surprising.”