Housing market growth slows after 16 months of price rises
The housing inflation slowdown reduced the annual growth rate from 11% to 9.4% causing a slight dip in the average house price from £189,306 to £188,374.
The quarterly outlook remained positive with a 1.5% quarterly rise in prices to September compared to the previous quarter.
Annual house price growth in London declined from 25.8% in Q2 to 21% in quarter three. Despite the drop, the average house price in the capital reached a record high of £401,072, 31% above the 2007 peak.
Robert Gardner, Nationwide’s chief economist, said: “Price growth may soften further in the final quarter of the year, given the high base for comparison from Q4 2013.
“However, the outlook remains uncertain. There have been tentative signs from surveyors and estate agents that buyer demand may be starting to moderate, but the low level of interest rates and strong labour market suggest that underlying demand is likely to remain robust.”
Andy Hatoum, co-founder of the property search engine Placebuzz.com, said his pipeline of buyers had begun to look less healthy.
“Yesterday the Bank of England confirmed that mortgage approval levels have slumped to a three-month low as more would-be borrowers are being excluded by the tougher lending criteria introduced in April,” he said.
Jonathan Hudson, founder of West End estate agents Hudson Property, said: “The market was not sustainable at the rate of growth we have experienced over the last few years, which was fuelled by strong overseas investment, cheap interest rates and a weak pound.
“We have seen overseas investment in new builds remain strong, as these buyers are keen to get investments outside of their own currency. However, a reduction in existing housing stock has dropped significantly, causing the prices to taper off a little.”
Hudson said he would still advise property hunters to buy now rather than wait to avoid the risk of gazumping.