Which way is the housing market going to go? It’s the question that’s been on everyone’s lips since this year’s scarily dramatic price growth began to come to an end. Some had predicted a spectacular bursting bubble but the reality seems to be a bit of an anticlimax.
Official Land Registry figures released today confirmed that average prices grew by a modest 0.1% to £177,299 in October after a slight fall of 0.2% in August. This is in line with other indicators that suggested moderate growth in October.
Today we also got figures from Nationwide, which reported a slow down in growth in November to 0.3%, from 0.5% last month. It said average prices are now at £189,388. This brings down the annual inflation figure to 8.5%, much higher than most of last year but down from highs of 11.8% back in June.
‘There is something of a disconnect between the slowdown in the housing market in recent months and broader economic indicators, which have remained relatively upbeat,’ said Robert Gardner, Nationwide's Chief Economist. ‘While cooling in the London market is a part of the story, this is unlikely to be main explanation for the slowdown.’
The Land Registry figures confirmed the oft-discussed regional imbalance. London’s house prices, once outstripping the rest of the country by a wide margin, grew by 0.7% in October, more than the north but behind East Anglia’s 1.6% and the south east’s 1.2%.
Gardner said indicators show prices are likely to remain ‘soft’ in the short term but added, ‘if the economy and the labour market remain in good shape and mortgage rates do not rise sharply, activity is likely to pick up in the quarters ahead.’
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