House price growth slowing
The pace at which house prices are increasing in the UK is beginning to stall, according to new figures.Statistics released by Nationwide show that although values rose by 0.5 per cent throughout October, annual price growth has slowed from 9.4 per cent in September to 9.0 per cent.This marks the second consecutive month where the rate in the increase of yearly prices has fallen, with Nationwide chief economist Robert Gardner suggesting it could be possible that the market has now "lost momentum"."The number of mortgages approved for house purchase in September was almost 20 per cent below the level prevailing at the start of the year. Some forward looking indicators, such as new buyer enquiries, suggest that activity may soften further in the near term, especially in London," he added.However, it was also indicated that activity could pick up again in the coming quarters, depending on the health of the labour market and the economy. Such a development is also dependant on mortgage rates staying around the same level as they are currently.With this in mind, Nationwide's House Price Index shows the indicators for the broader economy are still looking good. Unemployment rates have yet again fallen - standing at six per cent in the three months to August - while consumer confidence hasn't significantly dipped from the recent highs experienced earlier this year.Mr Gardner commented that low mortgage rates were partially helping to offset the effect of rising house prices when it came to affordability. Furthermore, it has been suggested that the Bank of England base interest rate will be increased gradually, ensuring that when it does eventually rise, the effect on the population's ability to borrow won't be immediately adversely affected. As a result, the outlook for the construction industry remains positive.
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