UK house prices fell at their sharpest rate for six years in August, according to Nationwide’s latest monthly House Price Index.
The average house price dropped by 0.5% month-on-month, bringing the average cost of a home to £214,745, down from £217,010 in July. Annual house price growth slowed to 2.0%, down from 2.5% in July. The fact that growth has remained in the range of 2-3% over the past year indicates there has been “little change” in the balance between supply and demand, the building society said.
Robert Gardner, Nationwide’s chief economist said: “Subdued economic activity and ongoing pressure on household budgets is likely to continue to exert a modest drag on house price growth and market activity this year, though borrowing costs are likely to remain low. Overall, we continue to expect house prices to rise by around 1% over the course of 2018.”
Help to Buy boosts demand for new-build homes
Help to Buy accounted for around 8% of house purchase mortgages in England in the 12 months up to March 2018, according to Nationwide. There were around 48,000 Help to Buy equity loans completed over the period, up 21% compared to the same period last year.
Under the new-build scheme, the government lends up to 20% of the property price interest-free for the first five years, while the buyer puts down a 5% deposit and takes a mortgage on the remainder. After the five-year interest-free period finishes, the borrower will be charged interest on the government loan. You can find out more about how the scheme works in our Guide to Help to Buy.
Help to Buy has accounted for more than a third (37%) of new build completions in England in the last 12 months, Nationwide’s data reveals. In the North West, it accounts for nearly half of new build purchases.
The scheme is due to finish in April 2021. However, Mr Gardner said: “Given the long lead time on many housing developments and the political consensus on the need to increase housing supply, it suggests the scheme will not come to an abrupt end.”
House prices see biggest monthly fall since 2012