Nationwide urges housebuilders to quicken pace of new builds
The latest Nationwide house price index shows that the rate of house price growth has halved in the last month.
Between August and September, house prices went up by 0.3%, compared to 0.6% between July and August and 0.5% the month before. On an annual basis, house prices are up by 5.3% in the 12 months to September, compared to 5.6% in the 12 months to August. This means the average house or flat now costs £206,015.
However, Nationwide also warned that housebuilders need to build more homes quickly and should be confident that people will want to buy the homes that they build. This is because the number of homes on the market remains close to record lows, partly due to low rates of construction.
Nationwide's chief economist, Robert Gardner, said: "The major housebuilders appear to have capacity to expand output, with most reporting land banks that could support around five years' worth of construction at current rates of building activity.
"The number of new homes built in England has picked up, but is still not sufficient to keep up with the expected increase in the population."
Government figures show that in the last year, 139,000 new homes were built in England, compared to the target of 225,000 new homes a year.
Gardner said: “The number of new homes built in England has picked up, but is still not sufficient to keep up with the expected increase in the population. In the four quarters to Q2 2016, 139,000 new houses were completed, 30% higher than the low point seen in 2010. However, this is still around 15% below the average rate of building in the five years before the financial crisis and 38% below the 225,000 new households projected to form each year over the coming decade.
Mr Gardner said that not enough new homes were being built in London and its suburbs in particular.
Across the UK, house price growth remained subdued, at 2% in Scotland compared to the previous quarter, 2.4% in Northern Ireland and small declines in house prices were recorded in Wales, down by 0.5% and the North of England, down by 0.2% on a quarterly basis.
Howard Archer, Chief UK & European Economist at forecaster IHS Global expects house prices to remain resilient in the final quarter of 2016, though he predicts a small dip in 2017.
He said: “We expect house prices to be essentially flat over the final months of 2016. While softer housing market activity is likely to limit house prices, we suspect that the current resilience of the economy and a shortage of properties will prevent prices from falling over the final months of 2016. “We believe that a slight dip in house prices is likely in 2017, possibly by around 3%.”
Latest data from the Bank of England show that mortgage approvals for house purchases weakened to a 21-month low of 60,058 in August, down from 60,925 in July, 64,155 in June, 66,450 in May, 70,225 in March and a two-year high of 73,490 in January.