Nationwide report fall in house prices in May

House prices in UK fall for third consecutive month, according to the Nationwide.

Natwest has reported that for the first time since 2009, house prices have fallen for three months in a row.

Prices dropped 0.2% in May, while the annual rate of price growth slowed to 2.1% – the weakest pace for almost four years, with Natwest highlighting that this was further proof that the housing market was “losing momentum”.

However, it said it was too early to say whether it was more than a “blip”, and that the slowdown could be linked to the recent pressure on household budgets caused by the weakness of the pound.

Prices have been rising as the cost of imported goods goes up. At the same time, inflation has overtaken wage growth.

“Affordability pressures” across the UK could also be blame.

It is predicted that pressures on the market are likely to continue, but a shortage in the supply of housing is likely to support prices.

According to Natwest, property prices rose by 4.5% in 2016.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, also said he expected 2% growth this year, with house prices returning to a “slowly rising path”.

“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,” he said.

“But the days of surging house prices driven by sharply rising loan-to-income ratios are gone.”

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