House price inflation slows to four year low of 2
House price inflation hit its slowest annual rate in nearly four years in April thanks to an 'uncertain economic outlook', according to the latest monthly index from Nationwide Building Society.
The 2.6 per cent year on year increase marked the weakest growth since June 2013, after hitting a peak of 5.7 per cent in March 2016, and took the average UK house price to 207,699.
House prices also fell for the first time in successive months since June/July 2012, with a 0.4 per cent drop in April following a 0.3 per cent decline in March, Britain's biggest mutual revealed.
In decline: House prices fell for the first time in successive months since June/July 2012, with a 0.4% drop in April following a 0.3% decline in March
Meanwhile, latest data from the Bank of England has revealed mortgage approvals for house purchases dipped to 68,315 in February, appreciably below the long term (1993 2017) monthly average of 82,044.
It comes after recovering to a 10 month high of 69,114 in January from 67,623 in December and an 18 month low of 61,445 in August.
Robert Gardner, chief economist at Nationwide, said that while monthly figures can be volatile, the recent softening in price growth may be a sign that households 'are starting to react to the emerging squeeze on real incomes or to affordability pressures in key parts of pandora catalogue australia the country'.
He said: 'It is too early to conclude whether the slowdown in house price growth is merely a blip, a reflection of the impact of the squeeze on household budgets, or is due to mounting affordability pressures pandora latest charms in key areas of the country.
'Given the ongoing uncertainties around the UK's future trading arrangements and the upcoming election, the economic outlook is unusually uncertain, and housing market trends will depend crucially on developments in the wider economy.'
He adds pandora gold and silver charms that household spending is likely to slow in the coming months, and this, combined with mounting affordability pressures, is likely to exert a drag on market activity and house price growth.
Squeezed out: House price inflation hit 2.6% year on year in April its slowest annual rate in nearly four years
He said: 'The subdued level of building activity and the shortage of properties on the market are likely to provide support for prices.
'As a result, we continue to believe that a small increase in house prices of around two per cent is likely over the course of 2017 as a whole.'
Mr Gardner added there may also be more fundamental reasons for the slowdown with house price growth having outstripped earnings growth for a sustained period of time, steadily eroding affordability.
For example, the typical house pandora outlet price is currently 6.1 times average earnings, well above the long term average of 4.3 times earnings, and close to an all time high of 6.4 times recorded in 2007.
Howard Archer, economist at IHS Markit, said the data confirmed his belief that housing market activity and prices will be increasingly pressurised by 'deteriorating consumer fundamentals and softer confidence'.
He expects this to intensify over the next month, cutting his forecast for house price gains this year to two per cent.
He said: 'April's second successive drop in house prices reported by the Nationwide provides compelling evidence the housing market is being increasingly affected by the increasing squeeze on consumers and their concerns over the outlook.
'We suspect markedly weakening consumer fundamentals, likely mounting caution over making major spending decisions, and elevated house price to earnings ratios will weigh down further on housing market activity and house prices over the coming months.
'However, a shortage of supply is likely to put a floor under prices.'
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: 'We weren't really surprised to see a second month of softening values as bearing in mind the long run of house price rises last year the market had to hit the buffers sooner or later, irrespective of the general election and Brexit.
'What we are seeing is homebuyers reaching an affordability ceiling and saying "no more".
'Once again it is those sellers who are recognising it and the importance of concentrating on the difference between the selling price and the buying price, rather than being wedded to unrealistic figures, who are getting on with moving.
'Unless buyers and sellers recognise that the market is not what it was 12 months ago, further inertia and falls in transactions will result.'
Brian Murphy, head of lending at Mortgage Advice Bureau, said: 'Whilst there will be a few who suggest this is the start of an overall downslide in the market, it's important to consider all the elements at play.
'The average house price as per the Nationwide report is still the highest since 2007, and activity levels remain broadly stable, both in terms of transaction volumes and lending.
'That said, obviously affordability plays a key part in the sustainability of the housing market, and with house prices at currently over six times the average salary, it's perhaps reasonable to suggest prices need to soften slightly and come back into line with reasonable expectations if we are to see a viable market for the rest of this year.'
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