< The latest Nationwide House Price Index for October emerged last week. It showed that prices rose by 0.5 per cent last month but that the annual rate of growth slowed to 9 per cent from 9.4 per cent in September.
"A variety of indicators suggest that the market has lost momentum", said Robert Gardner, Nationwide's Chief Economist. He added that: "The number of mortgages approved for house purchase in September was almost 20% below the level prevailing at the start of the year. Some forward looking indicators, such as new buyer enquiries, suggest that activity may soften further in the near term, especially in London."
The gradual slowdown in the property market has certainly been tangible in recent months. Despite the slight rise in prices during October, the overall trend is one of a market that has paused for breath. Or maybe a market that has simply come to its senses.
It's hard to deny that recent growth rates in certain areas of the country have been unsustainable. Finally, the 'irrational exuberance' in the market, to quote former Fed Chairman Alan Greenspan, appears to have subsided. And perhaps not before time.
The new lending rules introduced earlier in the year clearly triggered a slowdown but since then I suspect some good old-fashioned common sense has also played a role. Despite low mortgage rates and an improving economy, people sense that the market is inflated and are increasingly erring on the side of caution. Demand is still there, as are mortgages, but borrowers overall appear more grounded.
Paying well over the odds for property, or at the top of the market at least, has caught many people out before. And they don't want it to happen again. This is especially the case in the capital where growth rates have been extreme over the past couple of years.
So what next for the market? Robert Gardner at the Nationwide seems relatively upbeat: "Broader economic indicators remain positive. The labour market has continued to improve, with the unemployment rate falling to 6% in the three months to August and mortgage rates have fallen back towards all-time lows. Indicators of consumer confidence have also remained close to recent highs. If the economy and the labour market remain in good shape, activity is likely to pick up in the quarters ahead providing mortgage rates do not rise sharply."
Gardner has a point. The economy is doing well and confidence is fairly strong. But the market has had one hell of a run in certain areas of the country. For activity - and prices - to pick up materially again in the near term could cause problems further down the line.
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The latest Nationwide House Price Index for October emerged last week. It showed that prices rose by 0.5 per cent last month but that the annual rate of growth slowed to 9 per cent....
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