House prices start the year with a slight drop – Nationwide

Average house prices dropped in the first month of the year, Nationwide figures show.

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The Nationwide House Price Index for January shows average values fell from £205,898 in December to £205,240 in the first month of 2017.

Despite this, Nationwide’s release paints this as a 0.2% increase taking into account seasonal adjustments, and 4.3% up annually. The annual rate of growth has also slowed from 4.5% in December.

In reality, the figure is 0.31% down on a monthly basis, but is still up on the £196,829 recorded this time last year.

Robert Gardner, Nationwide’s chief economist, said: “On the one hand, there are grounds for optimism. The economy has remained far stronger than expected in the wake of the Brexit vote.

“Recent data indicates that the economy didn’t slow in the second half of 2016 and the unemployment rate remained stable at an 11-year low in the three months to November.

“However, there are tentative signs that conditions may be about to soften. Employment growth has moderated, and while wage growth has edged up in recent months, in real terms (i.e. after adjusting for inflation), earnings growth has already slowed.

“With inflation set to rise further in the months ahead as a result of the weaker pound, real wages are likely to come under further pressure. Employment growth is also likely to continue to moderate, should the economy slow as most forecasters expect.”

He predicted that house prices would grow around 2% in 2017.

Responding to the data, Ben Madden, managing director of Thorgills, said: “House prices continue to sit safely nestled in the eye of the storm.

“While impacting political events swirl around, the steady upward march of house prices remains underpinned by a shortage of housing stock and ongoing low borrowing costs for buyers.

“These two key factors seem unlikely to change in the short term while the economy seeks steady ground – although prospective buyers will have half an eye on the outcome of tomorrow’s interest rate meeting.

“The long-awaited housing white paper, which we could see next week, will also give us a good indication of how the government intends to tackle this essential lack of housing.

“In the meantime, property prices continue to ride out the maelstrom and look set to continue on their ponderous upward trajectory in the year ahead.”