UK house prices are having their worst streak since the 2009 crash

pulse

June 1, 2017 8:55 AM

House prices have dropped for three months — for the first time since February 2009.

Houses in Notting Hill,

LONDON — Nationwide's measure of UK house prices fell 0.2% month-on-month in May, well below the +0.2% predicted by a poll of economists.

That means that house prices have dropped for three consecutive months for the first time since February 2009, and are now 0.9% below their February peak.

The year-on-year growth rate dropped to 2.1% from 2.6% in April, which was also below the 2.4% consensus.

While individual month-on-month indexes are subject to volatility, year-on-year trends point to a major loss of momentum in the UK housing market.

Nationwide House Price Index, year-on-year growth (%)

Samuel Tombs, chief economist at Pantheon Macroeconomics, also said constrained affordability was the primary cause of the slowing market.

He said: "The squeeze on real wages has constrained affordability, while growing public concern about the economic outlook has undermined confidence.

"For now, we still think house prices will return to a slowly rising path, given that surveys suggest supply is tightening rapidly, employment growth looks set to remain steady at about 1% year-over-year, and mortgage rates still have scope to fall a little further."

Tombs forecasts 2% overall growth in the UK market in 2017.

Price falls in areas of inner London have been particularly acute. A fall of interest from international buyers has reportedly left developers with a glut of overpriced luxury flats in areas including London Bridge, Waterloo, and Elephant & Castle.

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