Nationwide report house prices drop for third month in a row

UK house prices fall again in May

According to a recent report by Nationwide, UK house prices fell for the third month in a row, the first time this has happened consecutively since 2009.

House prices fell by 0.2% last month, with the annual rate of price growth down to 2.1%, the slowest pace for almost four years.

The building society have said the report is testament that the housing market is ‘losing momentum’, however did say that it was too early to determine if this was more than a ‘blip’.

Instead they suggested the decline in growth could be a result of the recent squeeze on household budgets caused by the weakness of the pound.

Prices are rising as the cost of imported goods increases, and at the same time inflation is overtaking wage growth.

The report also said that ‘affordability pressures’ in parts of the UK could also be to blame.

Robert Gardner, chief economist at Nationwide, said: “The number of people in work has continued to rise at a healthy pace.  Indeed, the unemployment rate fell to a 42 year low in the three months to March”.

Gardner believes the pressures on the market are likely to remain, affecting house price growth in future quarters.

He did add that a shortage of supply in the housing market, should support prices going forward and “as a result, we continue to believe that a small increase in house prices around 2% is likely over the course of 2017 as a whole.”

Chief UK economist at Pantheon Macroeconomics, Samuel Tombs, also expects a 2% growth in house prices this year.

Tomb said: “Surveys suggest supply is tightening rapidly, employment growth looks set to remain steady at about 1% year-over-year, and mortgage rates still have scope to fall a little further.  However, “the days of surging house prices driven by sharply rising loan-to-income ratios are gone”.

Full article available on BBC News: http://www.bbc.co.uk/news/business-40117132?intlink_from_url=http://www.bbc.co.uk/news/topics/38a2903a-b068-486e-bda2-58c035e1490a/housing-market&link_location=live-reporting-story

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