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Nationwide: Annual house prices continue to moderate

Annual house price growth moderated for the third consecutive month in November, despite recording a month-on-month rise.The latest Nationwide House Price Index reveals the annual rate of increase declined from nine per cent in October to 8.5 per cent this month, taking the average cost of a residential property to £189,333. Month-on-month growth in November stood at 0.3 per cent - down from 0.5 per cent in October.Robert Gardner, Nationwide's chief economist, said mortgage approvals for house purchases were almost 20 per cent below the level prevailing at the start of the year and 27 per cent below the long-term average.Housing market turnover rates are also well below long-term averages, with the number of mortgage transactions currently equal to around four per cent of the housing stock - significantly below the long-run average of six per cent. Mr Gardner identified "a disconnect between the slowdown in the housing market in recent months and broader economic indicators, which have remained relatively upbeat".The labour market is continuing to improve, with the unemployment rate well below the levels recorded last year, he pointed out. In addition, consumer sentiment is strong, with healthy rates of retail sales growth and new car registrations pointing to strong levels of household confidence.At the UK level, affordability is not overly stretched. First-time buyers represent an unusually high proportion of mortgage activity, while typical mortgage payments as a share of average income were close to the long-run average.Historically low mortgage rates have helped to counter the fact that house prices have been rising faster than incomes.Mr Gardner was optimistic about the prospects for the housing market in the long-term."Forward-looking indicators, such as new buyer enquiries, point to further softness in the near-term. However, if the economy and the labour market remain in good shape andmortgage rates do not rise sharply, activity is likely to pick up in the quarters ahead," he said. 

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