building society Nationwide has identified a record
high for UK house prices that was reached in October.
Last month saw the average price of a UK property
hit £189,333. The previous month saw a drop
in house prices, which fell by 0.1% through September.
Previous figures from the Land Registry suggested
a 0.2% drop, but Nationwide's new seasonally-adjusted
figures have revised this decrease downwards. The
month of October neatly undid the drop, and raised
prices to new highs with overall growth of 0.5% over
the course of the month.
new record level of £189,333 beats the previous
record high, which was reached in August, by just
£27. However, following the previous fall in
house prices October exceeded September's figure by
little less than £1,000. However, the annualised
growth rate of prices has decelerated to 9%, a drop
of 0.4%, and looks set to continue a downward trend,
according to the building society's most recent data.
This marks the second month in a row where the rate
of growth in UK property prices has dropped. Furthermore,
the number of new buyer enquiries is also shrinking,
most notably in London. According to the building
society's chief economist Robert Gardner, this could
cause the capital's market to suffer. Gardner said:
"A variety of indicators suggest that the market
has lost momentum. The number of mortgages approved
for house purchase in September was almost 20% below
the level prevailing at the start of the year. Some
forward-looking indicators, such as new buyer enquiries,
suggest that activity may soften further in the near
term, especially in London."
Nationwide remains optimistic about the prospects
of the market picking up again in the not-too-distant
future. Following on from the above remarks, Gardner
went on to note that "broader economic indicators
remain positive. The labour market has continued to
improve, with the unemployment rate falling to 6%
in the three months to August and mortgage rates have
fallen back towards all-time lows. Indicators of consumer
confidence have also remained close to recent highs."
As long as there is no sudden increase in mortgage
rates, Gardner believes that continued health for
the labour market and wider economy could lead activity
in the property market to recover within the next
more gradual rise in interest rates, on the other
hand, Gardner believes that the housing market will
be able to bear if the economy stays in good shape.
Chief economist for the Bank of England Andy Haldane
suggested recently that no interest rate rise should
be expected until next year, and that when increases
do come they will indeed be implemented gradually.
Similar views have been recently expressed by HIS
Global Insight's chief UK and European economist Howard
Archer. Archer agrees that prices are likely to keep
rising but more gradually, and said that "buyer
interest in houses is unlikely to fall away with…
elevated consumer confidence, markedly rising employment,
and still low mortgage interest rates."