28th January 2016
The annual rate of UK house price growth fell back to 4.4% in January according to Nationwide.
The lender reported that property prices rose by 0.3% month-on-month after enjoying an increase of 0.8% in December, which had been the largest increase since April.
Notably Nationwide’s house price index has been weaker than most other reports.
For example, the latest data from the Halifax showed that house prices were up 9.5% year-on-year in the three months to December, which was more than double both the 4.5% annual rate reported by the Nationwide for December and 4.4% for January.
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Commenting on the latest figures, Robert Gardner, Nationwide’s chief economist, said: “The pace of UK house price growth remained broadly stable during January. Indeed, annual house price growth has remained in a fairly narrow range between 3% and 5% since the summer of 2015.
“As we look ahead, the risks are skewed towards a modest acceleration in house price growth, at least at the national level.”
Looking at the fundamentals supporting the market, he noted that the labour market appears to have significant forward momentum, while employment too has continued to rise at a robust rate in recent months and in addition while the pace of earnings growth has slowed somewhat, in inflation-adjusted terms regular wages continue to rise at a healthy pace.
Gardner added: “With this trend expected to continue and with interest rates also likely to stay on hold for longer than previously anticipated, the demand for homes is likely to strengthen in the months ahead.
“The concern remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability.”
Despite the reduced increase in house prices reported by Nationwide, Howard Archer, chief UK and European economist at IHS Global Insight maintains the view that valuations are likely to see solid increases over the coming months amid healthy buyer interest and a shortage of properties.
“We expect house prices to rise by around 6% over 2016, barring a major loss of momentum in the economy,” he said.