With almost every pundit predicting house prices to moderate in 2017 – perhaps even fall – it comes as some surprise that annual vales in the year to the end of February actually rose according to new figures from the Nationwide.
The annual rate of growth was little changed in February at 4.5 per cent, slightly higher than the 4.3 per cent recorded in January. House prices increased by 0.6 per cent over the month, after taking account of seasonal factors.
The building society says recent data suggests that the UK economy has continued to perform relatively strongly, accelerating slightly in the final quarter of last year and expanding by 0.7 per cent quarter-on-quarter.
“The outlook is uncertain, but we, along with most other forecasters, expect the UK economy to slow through 2017 as heightened uncertainty weighs on business investment and hiring. Consumer spending, a key engine of growth in recent quarters, is also likely to be impacted by rising inflation in the months ahead as a result of the weaker pound” says Robert Gardner, the society’s chief economist.
“Nevertheless, in our view a small rise in house prices of around two per cent is more likely than a decline over the course of 2017, since low borrowing costs and the dearth of homes on the market will continue to support prices” he adds.
Market commentator Jeremy Leaf, a north London estate agent and a former RICS residential chairman, says: “Stability in the market is welcome at the moment with so much talk of rising and falling prices and seasonal changes. We’ve noticed an encouraging increase in first-time buyer demand for smaller properties, bearing in mind there seems to be a levelling of the playing field with investors and cash buyers.”