From the research conducted by the Nationwide Building Society, they found that the annual rate of house price growth has increased to 3.2% at the beginning of 2018, compared to 2.6% at the end of 2017. The prices of houses have gone up by 0.6% over the month, even after accounting for the seasonal factors, there has been the same increase as December.
The Nationwide Building Society has analysed the statistics from their research and they have found that the acceleration in yearly house price growth is quite surprising, as there have been signs of softening in the household sector in the recent months. These signs have highlighted that retail sales were quite low during the Christmas period, which was key measures of consumer confidence, as the squeeze on household incomes continue to affect people. Correspondingly, mortgage approval rates have been declined to their lowest levels for three years in December, with just 61,000. Although activity around the end of the year can be unpredictable, the low rates are as a result of the quiet activity in October and November (there were around 65,000 monthly approvals per month, compared to the average of 67,000 approvals over the previous year). Despite this, there have been a few clear signs of an increase, as the surveyors report that enquiries from new buyers have remained quiet in recent months. The most likely key factor in contributing to the house prices is the low supply of housing.
The research from Nationwide concludes that we can expect the performance of the housing market to be largely determined by the developments in the wider economy. The developments of Brexit will remain to be an important factor, though it will remain hard to foresee with the UK economy suggested continuing growing at a modest pace. It is predicted that there will be an annual growth of 1% to 1.5% in 2018 and 2019. The quiet economic activity and the ongoing squeeze on household income are expected to slow down the activity in the housing market and house price growth. The slower pace of building activity in the recent years and the lack of properties on the market are key factors in providing ongoing support for the house prices.
About the Author
Stuart Mosely (CeFA, CeMap, CLTM) founded SJ Financial Solutions in June 2005 having spent 12 years with big corporates such as Halifax and Santander. He felt the personal touch and straight speaking was missing from financial and mortgage advice services and set up SJ Financial Solutions to change this.
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