Residential property prices dropped for the third consecutive month in May, according to the Nationwide.
House prices in Britain have depreciated for the third consecutive month for the first time since the height of the financial crisis in 2009, according to Nationwide.
The decline means that the annual growth rate in May dropped further, to 2.1%, which according to the UK’s largest building society, is the lowest level in almost four years, providing further evidence that the housing market is running out of steam.
This latest house price index reveals that the average price of a property fell by 0.2% between April and May, to £208,711. This compares with monthly declines of 0.4% in April and 0.3% in March. The annual growth rate of 2.1% is the lowest since June 2013, and compares with 2.6% in April.
The recent squeeze on household budgets, caused by high inflation and the increasing cost of imported goods, owed in part to the weakness of the pound, is likely to have been a major contributor to the slowdown.
Robert Gardner, Nationwide’s chief economist, commented: “It is still early days, but this provides further evidence that the housing market is losing momentum. Moreover, this may be indicative of a wider slowdown in the household sector, though data continues to send mixed signals in this regard.”
It is unclear at this stage whether recent slowdown in the housing market and fall in property prices is a blip or a sign of things to come, but given the fact that real incomes are coming under increasing pressure as inflation overtakes wage growth, the likelihood is that property prices will slow further and household spending is likely to weaken along with the wider economy.
But while many experts, such as Samuel Tombs, chief UK economist at Pantheon Macroeconomics, accept that “the days of surging house prices are gone”, for now at least, he does expect to see house prices rise this year, albeit at a reduce rate of growth of around 2%.
“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 slowdown in the housing market is anything but uniform, according to another expert, Jonathan Hopper, managing director of Garrington Property Finders.
He commented: “Properties in some regions are seeing double-digit price reductions, yet at certain price points in the most in-demand areas, gazumping and intense competition between buyers are the order of the day.
“If there is one universal it is the chronic shortage of supply. Where there are more buyers than homes for sale, prices will inevitably edge upwards.”