27th March 2015
The housing market is continuing to soften as annual price growth slowed for the seventh month in a row.
The latest data from Nationwide shows house prices in the UK increased by 0.1% in March but the annual pace of growth slowed for the seventh month in a row from 5.7% in February to 5.1% in March.
The slow down comes after unbridled growth in the early part of last year and UK house prices are currently around 2% above their pre-crisis levels with the average home now costing £189,454.
Nationwide chief economist Robert Gardner said house price growth had ‘moderated across the UK’.
‘Economic conditions have remained supportive, with labour conditions continuing to improve and mortgage interest rates close to all-time lows,’ said Gardner.
‘’Nevertheless, the pace of housing market activity has remained subdued, with the number of mortgages approved for house purchase in January around 20% below the level prevailing one year ago.’
There is still regional variation in price growth and prices in London and the South of England are continuing to see the strongest rates of annual growth. However, Gardner added that there was ‘a noticeable softening this quarter, particularly in London’.
Prices have cooled in the North West, Scotland and Wales even though prices are still below their 2007 highs.
Despite the growth of house prices in recent years, housebuilders have been slow to respond to increased demand for property since the financial crisis.
In 2014, 119,000 homes were built in England which is 11% higher than the low point seen in 2010, but still 25% below the average rate of building in the five years before the crisis.
‘Moreover, official estimates suggest that even before the crisis building activity was running below that required to keep up with the natural growth in the population,’ said Gardner.
‘Hopefully, construction activity will strengthen further in the period ahead. The major housebuilders appear to have capacity to expand supply, with most reporting land banks, which, at current rates of building activity, could support construction for more than five years.