House prices in May no cause for cheer

Economists and property experts have painted a gloomy picture of the rest of the year for house prices, after the latest index from Nationwide showed the market fell short of expectations this month.

UK house prices rose 2.4% in May compared with the same month last year, a slower rate of growth than expected, according to Nationwide.

In April prices fell by 0.2% over the month, after taking account of seasonal factors, with supply remaining low and surveyors reporting subdued numbers of new buyer enquiries.

Annual house price growth has been confined to a fairly narrow range of 2-3% over the past 12 months, suggesting little change in the balance between demand and supply in the market over that period.

Chief economist at Nationwide Robert Gardner said he saw “few signs of an imminent change”.

Looking further ahead, he said “much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates.

“Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year, though borrowing costs are likely to remain low.
“Overall, we continue to expect house prices to rise by around 1% over the course of 2018.”

 

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