2017 is off to a steady start for UK house prices, according to Nationwide’s latest index.
Property values edged up 0.2 per cent in January 2017, the lender’s research reveals, taking prices to 4.3 per cent above a year ago – only slightly beow the 4.5 per cent recorded in December 2016.
“The outlook for the housing market remains clouded, reflecting the uncertainty surrounding economic prospects more broadly,” comments Robert Gardner, Nationwide’s Chief Economist.
“On the one hand, there are grounds for optimism. The economy has remained far stronger than expected in the wake of the Brexit vote. Recent data indicates that the economy didn’t slow in the second half of 2016 and the unemployment rate remained stable at an 11-year low in the three months to November.”
“However,” he adds, “there are tentative signs that conditions may be about to soften. Employment growth has moderated, and while wage growth has edged up in recent months, in real terms (i.e. after adjusting for inflation), earnings growth has already slowed.”
With inflation set to rise further in the months ahead as a result of the weaker pound, real wages are likely to come under further pressure.
As a result, Nationwide “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”.
Nonetheless, with property supply remaining low and underpinning values, house prices are expected to climb by around 2 per cent across the whole year.
