House price growth slows in August - Nationwide

(Sharecast News) - Annual house price growth slowed in August as affordability remained stretched, according to a survey released by Nationwide on Monday. House prices grew 2.1% on the year last month, down from 2.4% growth in July.

On the month, prices dipped 0.1% in August following 0.5% growth the month before.

The average price of a home stood at £271,079 last month, down from £272,664 in July.

Nationwide chief economist Robert Gardner said: "The relatively subdued pace of house price growth is perhaps understandable, given that affordability remains stretched relative to long-term norms. House prices are still high compared to household incomes, making raising a deposit challenging for prospective buyers, especially given the intense cost of living pressures in recent years.

"Combined with the fact that mortgage costs are more than three times the levels prevailing in the wake of the pandemic, this means that the cost of servicing a mortgage is also a barrier for many. Indeed, an average earner buying the typical first-time buyer property with a 20% deposit faces a monthly mortgage payment equivalent to around 35% of their take-home pay, well above the long run average of 30%.

"However, affordability should continue to improve gradually if income growth continues to outpace house price growth as we expect. Borrowing costs are likely to moderate a little further if Bank Rate is lowered again in the coming quarters. This should support buyer demand, especially since household balance sheets are strong and labour market conditions are expected to remain solid."