27th November 2015
House prices rose 0.1% but the annual growth has reduced slightly, which points to more sustainable increases in the property market.
Nationwide has released it monthly house price index that shows UK house prices edged up 0.1% in November and the average property now costs £196,305. On an annual basis, house price growth has fallen slightly to 3.7% from 3.9% in October.
Robert Gardner, Nationwide chief economist, said the annual rate of house price growth ‘has fluctuated in a fairly narrow range between 3% and 4% over the past six months, which is broadly consistent with earnings growth over the longer term’.
The fact that house price growth is keeping to a narrow range is a good thing for the future of house prices, but there are other factors at work.
‘While this bodes well for a sustainable increase in housing market activity in the period ahead, much will depend on whether building activity can keep pace with increasing demand,’ said Gardner.
‘Surveyors have continued to report a dearth of properties on the market in recent months, with the number of available homes reportedly at the lowest level since the late 1970s.’
The plan to boost housing supply set out by chancellor George Osborne in the Autumn Statement, which includes building 400,000 new homes, lifting restrictions on shared ownership, and rolling out a London Help to Buy scheme, will hopefully tackle the lack of supply in the market.
‘It is positive that policymakers are focusing on the need to increase home building, with the chancellor announcing a range of measures aimed at boosting housing supply in his Autumn Statement,’ said Gardner.
‘The current rate of construction activity is well below the projected rate of household formation. Only 135,000 new homes were built in England in the 12 months to September 2015, well below the c.220,000 new households that are projected to form each year over the next decade.’