UK housing market outlook uncertain

The UK housing market grew at its slowest rate for over a year according to the latest Nationwide house price index.

January saw property values increase by 0.2% in comparison to December’s rise of 0.8%.

The annual rate of price growth also dropped slightly, with a 4.3% rise in January, compared with 4.5% in the previous month.

The average price of a home in the UK was £205,240 down on December’s average of £205,898.

Nationwide’s Chief Economist, Robert Gardner, said the outlook for the housing market remains “clouded” due to the wider economic uncertainty.

“On the one hand, there are grounds for optimism. The economy has remained far stronger than expected in the wake of the Brexit vote. Recent data indicates that the economy didn’t slow in the second half of 2016 and the unemployment rate remained stable at an 11-year low in the three months to November.

“However, there are tentative signs that conditions may be about to soften. Employment growth has moderated, and while wage growth has edged up in recent months, in real terms earnings growth has already slowed.”

With inflation expected to continue rising over the coming months, the weaker pound could put real wages under increased pressure, with Nationwide believing that the economy may slow through 2017.

Due to the unwavering demand for housing and low borrowing costs, the building society suggests a modest increase in house prices of 2% is a more likely outcome than any decline over the course of the year.

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