New figures from Nationwide found that house prices fell by £1,354 in February, marking the first decline since August last year.
The latest figures from Nationwide found that the average UK investment property price fell by 0.3 per cent to just £210,402 last month. This reverses the unprecedented 0.8 per cent monthly rise that was registered in January. December also saw a 0.5 per cent increase.
Nationwide spoke out about the figures and said that although monthly figures can be volatile, the slowdown in price growth was consistent with signs of a softening property market and a decline in consumer confidence in recent months.
Nationwide’s report also found that years of strong house price rises mean that property now makes up over a third of UK households’ wealth. Pensions are the only sector that exceed this.
Annual house price inflation had also risen by 3.2 per cent in January. It then slowed down drastically to 2.2 per cent.
Nationwide predicted that overall house price growth would slow to between 1 per cent and 1.5 per cent this year. This is due to modest overall economic growth.
Nationwide’s chief economist, Robert Gardner, said: ‘Retail sales were relatively soft over the Christmas period and at the start of the new year, as were key measures of consumer confidence, as the squeeze on household incomes continued to take its toll.’
Nationwide’s report also looked at how house prices can affect investor confidence due to the UK’s substantial property wealth. Between 2014 and 2016 property wealth was worth almost £12.8 trillion. This rendered it the largest store of household wealth in the UK after pensions.
Head of lending for Mortgage Advice Bureau, Brian Murphy, commented: ‘The fact that prices dropped in February from January might suggest that those were buying properties last month were in negotiation mode and chipping the purchase price. At this stage, it’s too early to say that any suggestion of interest rate increases in 2018 made any difference to consumer confidence in relation to house prices in February, and more likely it’s practical factors that caused prices to cool.’
He explained: ‘For example, as the Nationwide report suggests, mortgage approvals have hit a three-year low, which suggests less competition for properties in some areas, which would naturally lead to it becoming more of a ‘buyers’ market. That said, this is likely to be offset by the fact that stock levels remain low, therefore providing a counterbalance, which provides support for the market as we move towards the spring.’