The house prices in the United Kingdom are increasing at its slowest annual pace in more than five years. Nationwide, a mortgage lender has said that it comes as uncertainty regarding the economy and squeezed household budgets affect the demand.
The growth in the prices dropped from 2 percent last September to only 1.6 percent in October. The amount is far below the between 2 percent to 3 percent range recorded over the past 12 months.
The biggest building society in the United Kingdom said that the low growth was “in line” with its expectations. It also predicted that house prices will rise by approximately 1 percent over the course of the year. Currently. the average house price in the United Kingdom is £214,534, down from the £214,922 that was recorded last month.
Robert Gardner, the chief economist of Nationwide, stated: “Looking further ahead, much will depend on how broader economic conditions evolve. If the uncertainty lifts in the months ahead, there is scope for activity to pick up throughout next year.”
He added: “The squeeze on household incomes is already moderating and policymakers have signalled that interest rates are only expected to raise at a modest pace and to a limited extent in the years ahead.”
Despite the slowdown that was observed in the market, there has been a recovery in the first-time buyer transactions, which are currently broadly in line with the levels that were recorded prior to 2008. The improvement in credit availability, which includes the introduction of schemes including Help To Buy, and historically low-interest rates have helped in boosting the activity.
The slowdown in the property market in the United Kingdom has been partly blamed on the Brexit referendum. According to the figures that were released Nationwide last April, the house prices were growing by approximately 5 percent per year around the time of the Brexit vote, however, this year, the growth stalled to around 1 percent.
The proportion of properties that are being privately rented has also doubled in 20 years, with one of the major think tanks releasing a warning earlier this year that a third of the millennials will still be renting when they are already collecting their pensions.
The house price index of Nationwide is based on owner-occupier house purchase transactions that involve a mortgage. Buy-to-let and cash deals are not considered.