Annual house price growth continues to slow

Jessica Nangle

December 1, 2016

bath houses

Annual house price growth slowed to 4.4% in November from 4.6% the previous month – its lowest rate since January – with a 0.1% month on month increase, Nationwide’s house price index reveals.

With average prices falling for the fourth month running fixed rate mortgages remain the most popular product type which Robert Gardner, Nationwide’s chief economist, argues could be “driven by a desire to lock in record low interest rates.”

He said: “Fixed rate deals are most popular amongst first-time buyers for whom certainly over monthly payments is likely to be particularly important.

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“Over the past 12 months, 95% of new mortgage lending to first-time buyers was on fixed rates.”

Currently historically low interest rates have benefited borrowers, with 2-year fixed rates for 10% deposits being the lowest they have ever been at 2.42%.

Jonathan Hopper, managing director of Garrington Property Finders, said it was “business as usual” for Britain’s housing market.

“Gone is the unsustainable, double-digit inflation of last year,” he said.  “Price growth remains solid thanks to steady demand and perennially weak supply.

“Many would-be buyers who had been holding off until the referendum dust settled have given up trying to second guess the impact of Brexit on their finances – and are instead focusing on the property market’s strong fundamentals and taking the plunge.”

And Adrian Gill, executive director at Your Move & Reeds Rains, said: “With so many lenders now offering record low mortgage rates, there has never been a better time to buy.”

Jeremy Duncombe, director at Legal & General Mortgage Club, added: “Though these figures show a softening in house price growth that continues last month’s trend, it’s important that we are not distracted from the ongoing annual increase in house prices that persist in making life harder for many first-time buyers.”

The lack of supply paired with increasing demand continues to be a problem for first-time buyers in particular, despite the positive signs displayed by the index.

Andrew McPhillips, chief economist at Yorkshire Building Society, said: “Although it is positive that more people are looking to buy a home, the UK needs to build more properties to address the imbalance between supply and demand and make homes more affordable.

“The government’s housing whitepaper will hopefully include a range of far-reaching measures to address the housing crisis for the long-term.”

And Nick Leeming, chairman at Jackson-Stops & Staff, added:   “Greater political stability ahead may help the property market gain greater traction in 2017 but the key to unlocking this is increased housing supply and government action to ease the cost of moving.”

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