UK house price growth remains pretty subdued, Nationwide index shows

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Economists predict house prices will show little growth in 2017 (Source: Getty)

UK house price growth remains pretty subdued, edging 0.1 per cent lower in August according to the latest Nationwide House Price Index.

That compares to hardly spectacular, but still gains, of 0.2 per cent in July and 1.1 per cent in June on a monthly basis with "signs of cooling in the housing market and the wider economy" the building society's chief economist Robert Gardner said.

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The latest figure puts annual house price growth at 2.1 per cent - levels last seen in May, and prior to that, June 2013. That was also down from the 2.9 per cent in July and 3.1 per cent in June.

"Housing market activity is currently lacklustre amid weakened consumer fundamentals and fragile confidence," said EY Item Club chief economist Howard Archer, adding that house prices look unlikely to grow by more than two per cent in 2017.

Gardner said: “The economy grew by around 0.3 per cent per quarter in the first half of 2017, around half the pace recorded in 2016. The number of mortgages approved for house purchase moderated to a nine-month low of around 65,000 in June and surveyors have reported softening in the number of new buyer enquiries."

He added: “Nevertheless, in some respects the slowdown in the housing market is surprising, given the ongoing strength of the labour market. The economy created a healthy 125,000 jobs in the three months to June and the unemployment rate fell to 4.4 per cent – the lowest rate for over forty years. In addition, mortgage rates have remained close to all-time lows."

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He cited a squeeze on household finances with wages failing to keep up with rising inflation as potentially to blame.

“Ultimately, housing market developments will depend on wider economic performance," he said.

"The UK economy slowed noticeably in the first half of the year, and there has been little to suggest a significant rebound in the months ahead. While employment growth has remained robust, household budgets are under pressure. This suggests that housing market activity will remain subdued."

Meanwhile, the research found revenues from stamp duty rose to new highs.