Nationwide’s chief economist has said that housing price growth has slowed again across November, following reports that it ‘lost momentum’ in October.
The building society’s monthly index showed that house prices rose by 0.3 per cent in November, against October’s figure of 0.5 per cent, with the average house price now standing at £189,388 .
The annual change for November stands at 8.5 per cent, down from October’s figure of 9 per cent, which Nationwide’s chief economist Robert Gardner said represented the third consecutive month where annual growth has moderated.
“Housing market activity levels have remained relatively weak in recent months. The number of mortgages approved for house purchase in September was almost 20 per cent below the level prevailing at the start of the year and 27 per cent below the long-term average.
“Similarly, housing market turnover rates are well below long-term averages. For example, the number of mortgage transactions is currently equal to around 4 per cent of the housing stock - well below the long-run average of 6 per cent.”
Mr Gardner said that there was a disconnect between the slowdown in the housing market in recent months and broader economic indicators, which have remained relatively upbeat.
“While cooling in the London market is a part of the story, this is unlikely to be main explanation for the slowdown. In particular, the labour market has continued to improve, with employment rising strongly and the unemployment rate falling sharply in recent months.”
He explained that affordability does not appear overly stretched, with first time buyers continuing to represent an unusually high proportion of mortgage activity and with typical mortgage payments as a share of average income close to the long run average.
“Historically low mortgage rates have helped to mitigate against the fact that house prices have been outstripping income growth.”
Mr Gardner added that new buyer enquiries point to further softness in the near-term, but that if the economy and the labour market remain in good shape and mortgage rates do not rise sharply, activity is likely to pick up in the coming quarters.