Nation Wide data shows annual house price growth softening in August 2015

Nationwide Building Society the largest building society in the world ,released August data showing uk house prices lowering.

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:

“UK house prices increased by 0.3% in August, though the annual pace of house price growth edged down to 3.2% from 3.5% in July. The annual rate of price growth was the weakest since June 2013; this partly reflects the high base for comparison, since prices increased at a particularly strong rate in August 2014.

“This month’s data provides further evidence that annual house price growth may be stabilising close to the pace of earnings growth, which has historically been around 4%.

Why have UK house prices been more resilient?

“UK house prices have proved remarkably resilient in recent years, certainly compared with many other developed economies, as the chart below demonstrate

“UK house prices didn’t fall as far during the financial crisis,and even where they declined by a similar magnitude, UK prices generally recovered their pre-crisis levels more quickly.

UK house prices are currently around 5% above their precrisis levels, while prices are still well below their pre-crisis peaks in Ireland (-38%), Spain (-36%) and the Netherlands

(-18%).

“Clearly house price trends are determined by a wide range of factors, but labour market developments are amongst the most important. The strength of the UK labour market in recent years is a key reason why house prices have recovered more quickly. Indeed, there is a strong correlation between employment and house price growth since the financial crisis across the major developed economies. As the chart on the previous page illustrates, house prices remain further below their pre-crisis peaks in countries where employment is also well below pre-crisis levels.

“However, with UK house building running well below the expected rate of household formation in recent years and with demand for homes rising, a significant increase in construction activity is required if affordability is not to become stretched in the years ahead.”