UK house prices have had their biggest monthly fall for six years, lopping more than £2,200 off the typical price tag, according to Nationwide.
The average property value fell by 0.5% – or £73 a day – in August, the biggest month-on-month decline since July 2012, Britain’s biggest building society said. In July, house prices increased by 0.7% month on month.
The fall takes the annual rate of house price growth down to 2%, though this is still above the 1% increase that Nationwide is pencilling in for 2018 overall. The average house price is now £214,745.
The decline is likely to have been driven by falling prices in London, which is in the grip of a slowdown. Earlier this month, Office for National Statistics data showed prices in the capital were falling at their fastest annual ratesince the depths of the financial crisis.
Nationwide’s chief economist, Robert Gardner, said that despite its slower pace, annual house price growth remained within a fairly narrow range of about 2% to 3% over the past 12 months. This suggested there was little change in the balance between demand and supply in the market, he said.
“Looking further ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates,” Gardner said.
He added that subdued economic activity and pressure on household budgets were likely to continue to exert “a modest drag” on house price growth and market activity this year, though borrowing costs were likely to remain low.
Howard Archer, the chief economic adviser at EY Item Club, said the decline showed that increases in the months to August were “a false dawn for house prices”.
“We suspect that any meaningful housing market upturn will remain elusive over the coming months,” he said. “The fundamentals for house buyers are likely to remain challenging, and they will not be helped by the Bank of England hiking interest rates.”
Some estate agents said that while London prices might be in the doldrums, the outlook in parts of the north of England was more positive.
Sam Mitchell, the chief executive of the estate agent Housesimple.com, said: “Walk into an estate agents in Liverpool or Manchester and they will tell you something entirely different from an agent in the capital. Properties are flying out the door, many at near asking price, and there’s a real appetite to buy.”
However, he said the picture was “far more challenging” in London, with large swathes of the capital still out of reach for people on middle and low incomes.
Jonathan Samuels of the property lender Octane Capital said there was “a blanket of uncertainty” over the market.
“While the employment market remains strong, stubbornly high inflation, the potential for another rate rise, overstretched household finances and the growing possibility of a no-deal Brexit are seeding serious doubt in the minds of prospective buyers,” he said.
“A Brexit no deal could hit prices in the capital, especially at the higher end, like a sledgehammer.”
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