House price growth ground to a halt in October after 15 successive month-on-month increases, according to an index. Nationwide Building Society said the rate of monthly change in property values was 0% in October – marking the first time since June 2015 that prices have not increased month on month.
The average UK house price in October was £205,904, which was 4.6% higher than a year ago. The annual rate of growth has slowed, from a 5.3% increase seen in September.
Robert Gardner, chief economist at Nationwide, said: “After 15 successive monthly increases, UK house prices were unchanged in October after taking account of seasonal factors.
“As a result, the annual rate of house price growth slowed to 4.6%, from 5.3% in September, though this is still in line with the growth rates prevailing since early 2015.” He said there are signs that housing market activity remains “fairly subdued”, with house sales around 10% below levels seen a year earlier.
Mr Gardner said this may partly reflect a stamp duty hike for buy-to-let investors, which came into force on April 1 and prompted investors to bring property purchases forward in the first three months of 2016. These purchases may otherwise have taken place later in the year.
Mr Gardner said recent house price growth has been “well in excess of average wage growth”.
As a result, the typical house now costs six times average earnings, up from 5.3 times earnings in 2013, he said. Over the past three years, he continued, house prices have increased by around a fifth (20%) while wages have only seen 6% growth.
But rock-bottom mortgage rates have helped to keep borrowers’ payments relatively affordable. Mr Gardner said: “The steady decline in borrowing costs over the same period has helped to lessen the impact on affordability for home-buyers.
He said: “By contrast, housing appears far more affordable in northern England, Wales and Scotland.” Howard Archer, chief UK and European economist at IHS Global Insight, predicted that house prices “may edge a little higher in the near term”.
He added: ” However, we suspect that house prices will come under increasing pressure as 2017 progresses and may dip modestly over the year, possibly by around 3%.” He said heightened uncertainty following the vote to leave the EU could constrain consumers’ confidence and willingness to make big purchases.
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