House prices have fallen for the first time in 17 months, dropping by 0.2% in September and providing new evidence that the property market is cooling, according to the latest update from the UK’s biggest building society.
The Nationwide said almost £1,000 was knocked of the value of a typical UK home as a result of the fall.The average price-tag now stands at £188,374 – down from £189,306 in August, though still well above the figure of £172,000 recorded a year ago.
However, Nationwide said the data disguised wide regional variations, with average prices in London reaching a record high of £401,000, taking them 31% above their 2007 peak.
Even within the capital, there were sizeable differences: in the borough of Camden, the rate of annual price growth was said to be running at a “remarkable” 42%, with a typical home there costing £884,000. In the adjacent borough of Brent the annual rise was 12%.
Outside London, the town or city that notched up the strongest growth was St Albans, where prices are up 24% on a year ago, while Nationwide said Newcastle was the “worst performer”, with a 4% annual increase.
The society said this was the first time prices had fallen on a monthly basis since April 2013, when they fell by 0.1%. As a result, the rate of annual house price growth fell from 11% in August to 9.4%.
Robert Gardner, Nationwide’s chief economist, said that while house price growth slowed in September, the picture on a quarterly basis was still relatively strong, with all 13 UK regions recording annual price gains.
Looking at the UK as whole, prices are around 2% above their pre-crisis peak. Gardner said price growth “may soften further” in the final three months of this year, though the outlook remained uncertain.
“There have been tentative signs from surveyors and estate agents that buyer demand may be starting to moderate, but the low level of interest rates and strong labour market suggest that underlying demand is likely to remain robust,” he added.
Nationwide’s figures came 24 hours after Bank of England data showed that mortgage lending for house purchases had slipped back for the second month running in August.
Last week property analysts Hometrack said price growth had stalled for the first time in more than 18 months as increasing numbers of would-be buyers worry about the warnings of a property price bubble and a looming rise in interest rates.
Howard Archer, an economist at IHS Global Insight, said that with property market activity slowing down after its early 2014 highs, “we believe house prices are likely to generally rise at a more retrained restrained rate over the coming months”. He added: “More stretched house prices to earnings ratios, the prospect that interest rates will start to rise before long (albeit gradually) and tighter checking of prospective mortgage borrowers by lenders will likely have some limiting impact on buyer interest.”
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