UK house price growth slows but remains in double digits, says Nationwide

Annual UK house price growth has slowed from 11% in July but remains in double digits, the Nationwide said today.

Prices rose 10% in the year to August, the mortgage lender said, with the average cost of a home up 0.8% in the last month, taking into account seasonal effects. Prices have now risen on average almost £50,000 in the last two years, the Nationwide said. 

The rises come despite widespread fears over a downturn in the housing market due to rising interest rates and an impending economic downturn brought on by the cost of living crisis.

Robert Gardner, Nationwide’s chief economist, said: “While annual house price growth softened in August, it remained in double digits for the tenth month in a row – at 10.0%.

“There are signs that the housing market is losing some momentum, with surveyors reporting fewer new buyer enquiries in recent months and the number of mortgage approvals for house purchases falling below pre-pandemic levels. However, the slowdown to date has been modest, and combined with a shortage of stock on the market, has meant that price growth has remained firm.”

The last month has seen some signs of prices starting to fall, with Rightmove reporting a 1.3% drop in August.

He explained Nationwide expected the market to slow further as the cost of living crisis intensified and if the Bank of England goes ahead with further expected interest rate rises. 

Nicky Stevenson, madaging director at national estate agent group Fine & Country said: “While the pace of growth is no longer accelerating, demand continues to outstrip supply throughout most of the country and the desire to trade-up among existing homeowners remains strong.”

Iain McKenzie, chief executive of The Guild of Property Professionals, explained: “It’s almost difficult to believe that just two years ago the average house was worth £50,000 less than today. This house price growth is unlikely to continue but it still leaves many first-time buyers priced out of the market.”

Nationwide has analysed the impact of rising energy costs on homes, and believes that the typical household bill will rise higher than the expected £3,545 a year when the 80% increase in the energy price cap comes in on 1 October.

It said (based on the April 2022 price cap) the least efficient homes (those rated F-G) are likely to see bills rise to over around £3,900 per year. 

Jonathan Hopper, chief executive of consultancy Garrington Property Finders, said: “With a month to go until household energy bills soar, the coming weeks will determine what form the market’s reality check will take.”

Halifax recorded a drop in UK house prices between June and July of 0.1%.