House Prices Slowest Growth for 2 Years

House Prices Slowest Growth for 2 Years.

Nationwide has issued its monthly property index report for August which shows that house prices for August rose by 3.2% which is the lowest it has been for the last two years.

Even allowing for seasonal adjustments given that many people are on vacation present the seasonally adjusted figure was an increase of 0.3%, demonstrating that demand is still there for property. In fact, we have seen reports suggesting that the number of properties available on the market has fallen yet the number of people seeking to buy a property has increased. Seasonally adjusted figures at 0.3% growth are on the lower side of average compared to the last few years and we expect the property market to stabilise over the coming year with average property rises expected at around 5% per annum.

The average house price now stands at £195,279 whereas a year ago it was £189,306 and two years ago it was £170,514.

Long-term view

The population of the United Kingdom is estimated to expand by another 10 million people within the next 10 years (source Office for National Statistics) with London set to expand its population by 1 million people within the next five years.

Given that the government has committed to building 200,000 new homes, demand is still going to massively outstrip supply and in the medium and longer term you should expect stable house price growth. There will be minor blips on the way interest rate increases coming but the law of supply and demand will take over and property prices will rise.