More of the same for house prices in August, with the market continuing to slow as we reach the end of the traditionally quieter summer period. Nationwide reported a small fall of 0.1% and Rightmove’s asking prices were down by 0.9%. Rightmove points out that it is a smaller than average fall for August, which is normally around -1.2%.
Within both sets of figures, it’s a mixed picture, though. There are some hotspots around the country, especially in the Midlands, where annual growth is rising twice as fast as average. In contrast, prices continue to struggle in the inner London boroughs, which were down by 2.9% for the month, but were up in the more eastern areas, such as Hackney (+1.5%), Redbridge (+0.7%) and Bexley (+0.3%).
Robert Gardner of Nationwide Building Society says,
“The annual pace of house price growth moderated to 2.1% in August, down from 2.9% in July. The slowdown in house price growth to the 2-3% range in recent months from the 4-5% prevailing in 2016 is consistent with signs of cooling in the housing market.”
One the key drivers of house prices is the economy and the latest data shows it is performing better than expected – unemployment is falling, hitting a 42 year low at 4.4%. Manufacturing is growing at its fastest pace for seven months and, according to the BRC (British Retail Consortium), retail sales increased at their fastest rate of the year in August – up by 2.4%. In addition, we are now moving out of the summer lull into one of the busier periods of the year, as buyers return refreshed from their holidays and hoping to move to a new home before Christmas.
Despite the positive economic data, #Brexit is still acting as a drag on the housing market and a recent survey by RICS shows that less homes are now achieving their asking prices.
Their members reported in July that homes at the top end of the market (those listed at more than £1 million) saw the greatest deviation from their initial asking prices, with 68% of respondents reporting sales prices coming in below it. While this is not uncommon in a flatter market, 33% of respondents said the agreed price was up to 5% below the asking price and 26% reported they were between 5% and 10% under.
When RICS’s members were asked about their thoughts on the future direction of the property market, most said they were expecting a continuation of the current flat trend for the next three months. Over the next twelve months, they were considerably more optimistic, with a net balance of +28% (of their members) predicting an increase in prices.