House price growth remained stable in the first month of this year, despite there being signs of a slowdown in the British economy that could put pressure on the housing market.
According to Nationwide’s latest house price index, the rate of house price growth remained broadly stable last month, standing at 4.3 per cent.
This a modest fall from the 4.5 per cent posted back in December.
Figures also showed that house prices had nudged up by 0.2 per cent last month.
Robert Gardner, chief economist at Nationwide, said the outlook for the housing market remains clouded, particularly in light of the uncertainty surrounding the economic prospects in the UK.
He said on one hand, there are grounds for optimism, particularly with the economy remaining stronger than expected following the Brexit vote.
However, Mr Gardner also said there are tentative signs this might change with figures warning of a slowdown in earnings growth.
There have also been a flurry of warnings that the rising rate of inflation could put real wages under more pressure.
Mr Gardner said he agreed with the consensus view that the economy is likely to slow through 2017, as the squeeze on household budgets intensifies and heightened uncertainty weighs on business investment and hiring.
Nevertheless, he predicted there could be a rise of around 2 per cent in house prices over the course of 2017, since low borrowing costs and the shortage of homes on the market will continue to support prices.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "Record low mortgage rates are largely responsible for much of the resilience we have seen in the housing market, with many borrowers taking advantage of some of the cheapest rates ever.
"We expect this to continue during the spring with lenders showing encouraging signs of wanting to do business by cutting rates further.
"But not all lenders can compete at the sharp end of pricing so others are continuing to look at areas where there is demand and the risk/reward ratio is acceptable to them, which may mean a welcome tweaking of criteria instead."
katherine.denham@ft.com
