Property values edged ahead by just 0.1% last month to stand at £204,947, according to Nationwide.
What’s the latest?
House price growth slowed in November for the third month running but the market is expected to pick up going forward.
Property values edged ahead by 0.1% last month to stand at £204,947. Meanwhile, the annual rate of change eased to 4.4%, down from 4.6% in October.
But despite the slowdown, Nationwide’s chief economist Robert Gardner said there were signs demand had strengthened in recent months.
Why is this happening?
The slowdown in house price growth is likely to reflect the tail end of the uncertainty felt in the aftermath of the UK’s vote to leave the EU.
Nationwide measures house prices towards the end of the buying process, meaning its figures tend to reflect market activity a couple of months earlier.
But consumer confidence appears to have increased in recent weeks and there are signs that buyers are returning to the market.
Gardner said: “There are some signs that, despite the uncertain economic outlook, demand conditions have strengthened a little in recent months, reflecting the impact of solid labour market conditions and historically low borrowing costs.”
Above: three-bedroom flat for sale on Lyon Square in Harrow, Middlesex.
Who does it affect?
The fact that the housing market appears to be holding steady following the Brexit vote is good news for existing homeowners.
Potential buyers have also benefitted from some of the heat coming out of the market, as this has caused price growth to slow, and means that they do not face the same intense competition they may have in previous months.
But there remains a shortage of homes for sale and demand continues to significantly outweigh supply.
Sounds interesting. What’s the background?
More forward-looking data suggests activity in the housing market is beginning to pick up again.
Survey data from the Royal Institution of Chartered Surveyors (RICS) showed the number of potential buyers registering with estate agents had increased for the second month in a row in October, but the level of properties for sale continued to fall.
At the same time, mortgages approved for people buying a new home hit a seven-month high during October, according to figures from the Bank of England.
Gardner said: “The relatively low number of homes on the market and modest rates of housing construction are likely to keep the demand-supply balance fairly tight in the quarters ahead, even if economic conditions weaken, as most forecasters expect.”
It is estimated that the UK needs to build around 250,000 new homes each year just to keep pace with rising demand. But only 140,000 new-build homes were completed in the year to the end of June.
The Government is due to publish a Housing White Paper this month, setting out its proposals for tackling the housing shortage.
In the meantime, the mismatch between supply and demand is expected to support prices even if transaction volumes fall.
Top three takeaways
- House price growth slowed in November but the market is expected to pick up going forward.
- Property values edged ahead by 0.1% last month to stand at £204,947, while the annual rate of changed eased to 4.4%, down from 4.6% in October.
- But despite the slowdown, there are signs that demand has strengthened in recent months.
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