Growth Slows Again

Wednesday, September 1 2004

House prices rose in August, although only by 0.1%, says new research from the Nationwide building society, bringing annual inflation down to 18.9% from 20.3% in the previous month of July.

This brings the price of the average house to £153,743 down from £154,299 in the previous report.

However, the Nationwide was keen to point out that, although this has been the lowest single monthly increase for almost three years, looking at the average increase for the past three months what we see is a moderation rather than a slump.

The Nationwide also said that the interest rate cycle which has seen five consecutive increases by the Bank of England, could be close to its peak which should help the market pick up into the autumn.

Alex Bannister, Nationwide’s Group Economist said today: ‘Whilst all this will to some extent reflect the usual summer lull, underlying activity levels have slowed. In addition, asking prices appear to have fallen sharply over recent weeks.

‘The downward adjustment relative to agreed house prices is likely to have been in part a reaction to the strong spring and early summer periods when asking prices rose more quickly that agreed house prices.

‘While we don’t expect agreed prices to decline, the trend in price growth is expected to remain on a weaker path for the rest of the year.’

Nationwide also said it is sticking to its forecast for house price inflation in year to December 2004 at 15%.