Nationwide’s house price index shows that property prices entered positive territory in November, growing 0.3 per cent on a monthly basis, up from the 0 per cent growth seen in October.
Annually, the report says that house prices grew by 1.9 per cent, again up on last month’s figure of 1.6 per cent. This leaves the average house price at £214,044.
Nationwide adds that the supply of homes has improved too, pointing out that net additions to the housing stock are now just 0.6 per cent below the levels seen in 2007. It must be noted that this figure take conversations from larger homes to small and “change of use” status into account, rather than simply counting new properties being built.
London, the South West, and the East of England are the biggest beneficiaries of this activity over the past decade – three places, Nationwide chief economist Robert Gardner says “which are amongst the areas that have seen relatively strong house price growth over this period, suggesting supply is responding to price signals.”
Gardner adds: “Looking forward, much will depend on how broader economic conditions evolve. In the near term, the squeeze on household budgets and the uncertain economic outlook is likely to continue to dampen demand, even though borrowing costs remain low and the unemployment rate is near 40-year lows.
“If the uncertainty lifts in the months ahead and employment continues to rise, there is scope for activity to pick-up through next year. The squeeze on household incomes is already moderating and policymakers have signalled that, if the economy performs as they expect, interest rates are only expected to rise at a modest pace and to a limited extent in the years ahead.”
Nationwide has been consistent in predicting a 1 per cent increase in house prices in 2018. Of this, James Pendleton founder director Lucy Pendleton says: “Fast forward one month and if the needle on the annual growth rate doesn’t move, then Nationwide will have been 100 per cent wrong.
“The lender’s prediction of a 1 per cent increase in house prices in 2018 is starting to look a little shaky on paper but, in truth, there’s not actually much in it.
“Run the numbers and, in fact, the average house price will only have to drop £776 over the next month for them to be right on the money. It takes a brave economist to make public predictions like this and a sizeable chunk of political uncertainty thanks to Brexit may well have helped this one stand the test of time.”
Yopa chief property analyst Mike Scott comments: “It now seems almost certain that the increase in prices for the whole of 2018 will exceed the Nationwide’s forecast of 1 per cent.
“Nationwide also reports a recovery in the number of houses built, with new-build construction at its highest rate for almost a decade. However, even this level of new supply is less than 80 per cent of the figure of 300,000 per year recommended in 2016 by the House of Lords economic affairs committee.”
On this theme, Housesimple.com chief executive Sam Mitchell adds: “The lack of stock continues to be a problem that no-one seems to be able to fix. New builds are crucial to ease the supply bottleneck, but so is improving the flow of existing stock coming onto the market.
“Low stock levels are propping up house prices and until we see a significant boost in supply across the board, both new and existing stock, we’re likely to see these artificial market conditions continue.”