UK annual house price growth was stable in August, according to Nationwide’s latest index, with a 1.6% annual increase and 0.2% monthly rise.
Despite subdued activity, commentators were in agreement that the picture reflects overall resilience in the face of ongoing political uncertainty.
“Geopolitical tensions remain high, with the conflict in the Middle East exerting upward pressure on energy prices and market interest rates”, Nationwide’s chief economist Robert Gardner said.
“Market expectations of the future path of Bank Rate have been volatile. While the latest energy price shock poses inflation risks, there have been encouraging signs that it is not feeding through to underlying price pressures. Indeed, private sector wage growth has eased further in recent months, which should give policymakers breathing space to assess the extent to which tighter policy is necessary to ensure inflation returns sustainably to target.
“Underlying affordability is improving, as house price growth remains well below earnings growth. although some of these gains have been offset by higher mortgage rates.
RBC Capital Markets managing director, equity research, Anthony Coddling said the market “is plodding rather than powering ahead”.
He added: “The headlines look almost indistinguishable from last month, and that is probably the most accurate description of the market right now: stuck in a slow lane. Geopolitical tensions in the Middle East are keeping energy prices and market interest rates elevated, casting a shadow over consumer confidence and mortgage affordability.
“The good news is that wage growth continues to outpace house price growth, so affordability is, quietly and gradually, improving. The bad news is that higher mortgage rates are eating into those gains.”
Nathan Emerson, CEO at Propertymark, welcomed the “stability and overall consistency” of the market.
“The wider economy continues to be finely balanced, with many factors continuing to prove an unwelcome undercurrent for consumer affordability. Across the year to date, there have been many challenges to navigate, with average energy prices climbing, inflation still higher than targeted and the base rate remaining higher than many might prefer.
“A key moment for many households will come with the next base rate decision due mid-month, closely followed by what might be included in the forthcoming autumn budget at the end of October.”
North London estate agent Jeremy Leaf said Nationwide’s figures suggest confidence in the market.
“Although prices are still fairly flat – up a bit, down a bit – that’s probably a good result as far as assessing current market health is concerned. Even more so as this data from the country’s largest building society is linked to customer mortgage approvals meaning these figures represent an albeit modest vote of confidence in the future.”
Jason Tebb, president of OnTheMarket, agrees resilience is evident in the latest sentiment reports.
“The market has steadied, helped by a calm hand at the tiller from the Bank of England with consecutive interest rate holds allaying fears and helping with affordability.
“Should mortgage rates remain stable and economic uncertainty eases, this could filter through to renewed activity and sales in the autumn. Inactivity isn’t an option for many, even if a new Prime Minister and another Budget brings an inevitable degree of doubt.”
For Nicky Stevenson, managing director of Fine & Country, the figures suggest slow and steady progress.
“The latest Nationwide figures reinforce the picture of a housing market that is moving forward, but at a measured pace. A 1.6% annual increase in house prices is neither boom nor bust, but reflects a market maintaining a solid baseline of activity while buyers remain highly selective.
“One of the biggest factors shaping the market is the increased choice available to buyers. The overall stock of homes for sale is around 5% higher than a year ago, giving purchasers more options and helping to keep house price inflation in check.
“There is activity in the market and transaction levels show that people are still moving, but buyers are taking longer to make decisions and are less willing to compromise.”
Autumn should see an improvement in activity, Stevenson added.
Iain McKenzie, CEO of The Guild of Property Professionals, said Zoopla’s recent figures showing an increase in search activity are a positive sign of what’s to come and “the housing market continues to demonstrate a reassuring degree of resilience despite a more subdued summer than usual.”
He added: “Search activity does not translate immediately into sales, but it is an important early indicator that more buyers are beginning to consider their options.”
