The start of 2017 has seen ‘broadly stable’ annual house price growth amounting to 4.3%, according to Nationwide’s House Price Index for January. This is only slightly below the annual growth rate of 4.5% recorded in December 2016. On a monthly basis, house prices rose by 0.2% in January, after seasonal factors were taken into account.
Looking ahead to the rest of the year, Nationwide says that the outlook remains unclear because of the uncertainty that exists around the country’s overall economic prospects.
The fact that the economy has remained far stronger than expected in the wake of the Brexit vote continues to be grounds for optimism. However, there are tentative signs that conditions may be about to soften, says Nationwide. Employment growth has moderated, and while wage growth has edged up in recent months, in real terms (after adjusting for inflation), earnings growth has already slowed.
“On balance, we agree with the consensus view that the economy is likely to slow through 2017 as the squeeze on household budgets intensifies and heightened uncertainty weighs on business investment and hiring,” said Robert Gardner, Nationwide's Chief Economist.
“Nevertheless, we continue to believe that a small rise in house prices of around 2% is more likely than a decline over the course of 2017, since low borrowing costs and the dearth of homes on the market will continue to support prices,” he added.
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