In their House Price Report, Nationwide has found that house prices rose by 0.2% in July, but annual house price inflation is at its lowest for nine years.
The report showed that annual house price inflation fell to 206% in July, its lowest rate since May 1996. This compares with 4.1% last month and 20% in July 2004.
Annual house price growth is now lower than wage growth for the first time since 1996. They believe that the market is showing signs of recovery, and the generally expected cut in interest rates next month will improve the market, but it is unlikely to accelerate the rate of growth, especially if labour market conditions worsen.
Our view
With interest rate cuts and a more positive outlook, we expect property to stabilise rather than shoot up.