Slowly does it

Slowly does it

Annual house price growth remained below 1% for the 11th month in a row in October, at 0.4%. Average prices rose by around £800 over the last 12 months, a significant slowing compared with recent years – for example, in the same period to October 2016, prices increased by £9,100. That’s the view of the Nationwide Building Society who, in their most recent survey of the UK Housing Market highlight that Indicators of UK economic activity have been fairly volatile in recent quarters. The underlying pace of growth appears to have slowed as a result of weaker global growth and an intensifying of Brexit uncertainty although the slowdown has centred on business investment, while household spending has been more resilient.  The underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing on a similar course to the past two years.
Solid labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook, the question is whether this pattern will continue.  “There were tentative signs of a softening in the jobs market in the three months to August, as employment fell, unemployment rose, and wage growth slowed a little. If this trend continues it would be a significant concern to the Lender, as the labour market has been the key factor underpinning the resilience of the household sector in recent years. However, monthly data is often volatile and the unemployment rate remains close to 40 year lows and real earnings growth (i.e. after taking account of inflation) is close to levels prevailing before the financial crisis.   Moreover, mortgage rates remain close to all-time lows – more than 95% of borrowers have opted for fixed rate deals in recent quarters, around half of which have opted to fix for five years.