Nationwide have released their HPI for August 2015.
- UK house prices increased by 0.3% in August
- Annual house price growth slowed to 3.2%
Commenting on the figures, Robert Gardner, Nationwides Chief Economist, said:
“UK house prices increased by 0.3% in August, though the annual pace of house price growth edged down to 3.2% from 3.5% in July. The annual rate of price growth was the weakest since June 2013; this partly reflects the high base for comparison, since prices increased at a particularly strong rate in August 2014.
“This month’s data provides further evidence that annual house price growth may be stabilising close to the pace of earnings growth, which has historically been around 4%. “However, survey evidence cautions that this trend may not be maintained unless construction activity accelerates. Surveyors reported the lowest ever number of properties on their books in July (on data extending back to the late 1970s – see chart below) whilst new buyer enquiries picked up.
Why have UK house prices been more resilient?
“UK house prices didn’t fall as far during the financial crisis, and even where they declined by a similar magnitude, UK prices generally recovered their pre-crisis levels more quickly. UK house prices are currently around 5% above their precrisis levels, while prices are still well below their pre-crisis peaks in Ireland (-38%), Spain (-36%) and the Netherlands (-18%).
Supply side developments also play an important role in explaining the divergence in house price performance. The UK experienced a much smaller increase in building activity in the run up to the financial crisis (see chart above). As a result, there was much less of an overhang of unsold properties to be worked off in recent years.
“However, with UK house building running well below the expected rate of household formation in recent years and with demand for homes rising, a significant increase in construction activity is required if affordability is not to become stretched in the years ahead.”