House prices stall in September

The rise in house prices seen over the past 15 months came to an end in September with house prices flat month-on-month, according to the latest Nationwide figures.

The lender reported that the rate of monthly change in house prices was 0% in October, the first time since June 2015 that monthly house prices have not gone up and reducing the annual rate of house price growth to 4.6% from 5.3%.

Robert Gardner, chief economist at Nationwide, said: “After 15 successive monthly increases, UK house prices were unchanged in October after taking account of seasonal factors. As a result, the annual rate of house price growth slowed to 4.6%, from 5.3% in September, though this is still in line with the growth rates prevailing since early 2015.”

It means the average price of a property in the UK is now £205,904. Nationwide said the housing market remained “fairly subdued” and that house sales are around 10% lower than they were 12 months ago.

Gardner said this could be because of the rise in stamp duty introduced in April for buy-to-let property investors and second home owners. This may have bought forward property purchases that would otherwise have taken place earlier in the year.

He added that there had been modest increases in buyer enquiries and mortgage approvals in recent months.

However, affordability still remains a major factor particularly with the Help to Buy scheme slated to finish at the end of the year.

Gardner said that house price growth is still “well in excess of average wage growth”. The average house still costs six times average earnings, up from 5.3 times in 2013. During that time house prices have risen by 20%, while average earnings have gone up by less than a third of that, 6%.

Gardner said: “The steady decline in borrowing costs over the same period has helped to lessen the impact on affordability for home-buyers. Indeed, the typical mortgage payment expressed as a share of average take-home pay is little changed over the period and is still in line with the long-run average.

“Moreover, the relatively low number of homes on the market and modest rates of housing construction are likely to keep the demand/supply balance fairly tight, even if economic conditions weaken in the quarters ahead, as most forecasters expect.”

The report found that there are big differences in affordability depending on where you live, with the cost of a mortgage as a proportion of net pay now above its 2007 peak in London but much more affordable in Northern England, Wales and Scotland.