Annual house price growth slows again in June - Nationwide

www.nationwide.co.uk/hpi

June 2015

Annual house price growth slows again in June  

UK house prices fell by 0.2% in June Annual house price growth moderated to 3.3% from 4.6% in May

Headlines Monthly Index* Monthly Change* Annual Change Average Price (not seasonally adjusted)

Jun-15 384.2 -0.2% 3.3%

May-15 385.2 0.2% 4.6%

£195,055

£195,166

* Seasonally adjusted figure (note that monthly % changes are revised when seasonal adjustment factors are re-estimated)

Forthcoming changes to methodology Please note that from next month onwards we will be using a revised methodology to calculate the house price index. Further details on these changes can be found here. We will continue to publish UK house price data each month and will ensure continuous prices series and indices are maintained.

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: “The annual pace of house price growth continued to slow in June, moderating to 3.3% from 4.6% in May. This maintains the gradual downward trend that has been in evidence since mid-2014, though this is the smallest annual rate of increase for two years. House price growth continues to outpace earnings, but the gap is closing, helped by a pickup in annual wage growth, which moved up to 2.7% in the three months to April from 1.9% at the start of the year.

For more analysis of regional house price movements, please click here.

Housing stock likely to be used more intensively unless supply picks up “Given the gap between population growth and rates of housebuilding (which has been evident for some time) the housing stock is likely to be used increasingly intensively until building activity catches up. There are signs that this has been occurring, with the number of vacant properties trending down since 2008, though council tax changes in 2013 impacted reporting and probably overstate the decline in the last two years1.

“The slowdown in house price growth is not confined to, nor does it appear to be driven primarily by, developments in London. In quarter on quarter terms, London has continued to see price growth at or above the rate in the UK overall over the past three quarters, while the annual rate of price growth in the capital remains the second highest in the country. “Eleven of the thirteen UK regions saw a slowdown in the annual rate of growth in Q2. Most parts of the country continued to see annual house price gains - the exceptions were Wales and Scotland, which recorded small declines (see chart above right).

DCLG note that until April 2013 dwellings undergoing major structural repairs were eligible for a council tax exemption. In April 2013 these exemptions were replaced with a new flexible discount. Local authorities can now apply any level of discount from 0% to 100%. Where local authorities award zero discounts there is less incentive to report properties as empty, which may have led to some under reporting of empty properties. 1

Media enquiries to: Robert Gardner, Chief Economist, [email protected] Deborah Isaac-Taylor, 01793 655354, [email protected]

“The strong relationship between supply constraints and vacancy rates is clearly visible at the regional level. As you might expect, regions where affordability is more stretched see far fewer vacancies (see chart below). For example, in London, the UK region where affordability is most stretched, only 1.7% of the housing stock was vacant in 2014, around half the 3.5% rate prevailing in the North of England.

“Given the apparent supply pressures, it is interesting that instances of under-occupancy are relatively high. For example, in 2014 almost half of owner occupiers in England lived in a property with two or more spare bedrooms. “While this may represent peoples’ preferences, it may indicate that the housing stock is not be being used as efficiently as it might be, perhaps because of a mismatch between the types of property people want and what is available. For example, it may be that older people are unable to find suitable properties to downsize, frustrating the ability of families to move into larger homes.”

Monthly UK House Price Statistics

Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15

Monthly % Change Seasonally Adjusted 0.4 1.3 0.5 1.2 1.0 0.8 1.5 0.8 0.9 0.5 1.0 0.7 1.1 0.2 0.8 -0.2 0.5 0.3 0.2 0.4 -0.1 0.1 1.0 0.2 -0.2

3 Month on 3 Month % Change 0.6 1.1 1.7 2.5 2.7 2.9 3.0 3.1 3.2 2.8 2.6 2.3 2.5 2.3 2.3 1.7 1.4 0.9 1.0 0.9 0.8 0.6 0.6 0.8 1.0

Annual % Change

Average Price

1.9 3.9 3.5 5.0 5.8 6.5 8.4 8.8 9.4 9.5 10.9 11.1 11.8 10.6 11.0 9.4 9.0 8.5 7.2 6.8 5.7 5.1 5.2 4.6 3.3

168,941 170,825 170,514 172,127 173,678 174,566 175,826 176,491 177,846 180,264 183,577 186,512 188,903 188,949 189,306 188,374 189,333 189,388 188,559 188,446 187,964 189,454 193,048 195,166 195,055

Note: Historical figures including index levels can be viewed using the following link: http://www.nationwide.co.uk/about/houseprice-index/download-data


Notes Indices and average prices are produced using Nationwide's updated mix adjusted House Price Methodology, which was introduced with effect from the first quarter of 1995. The data is drawn from Nationwide’s house purchase mortgage lending at the post survey approvals stage. Price indices are seasonally adjusted using the US Bureau of the Census X12 method. Currently the calculations are based on a monthly data series starting from January 1991. Figures are recalculated each month which may result in revisions to historical data. More information on the house price index methodology along with time series data and archives of housing research can be found at http://www.nationwide.co.uk/about/house-price-index/ From next month onwards we will be using a revised methodology to calculate the house price index. Further details on these changes can be found here. Photographs of our economist are available at: http://www.nationwide.co.uk/about/media-centre-and-specialist-areas/media-centre/photo-library

Legal Information The Nationwide House Price Indices are prepared from information that we believe is collated with care, but no representation is made as to their accuracy or completeness. We reserve the right to vary our methodology and to edit or discontinue the indices at any time, for regulatory or other reasons. Persons seeking to place reliance on the Indices for any purpose whatsoever do so at their own risk and should be aware that various factors, including external factors beyond Nationwide Building Society’s control might necessitate material changes to the Indices. The Nationwide House Price Indices may not be used for commercial purposes including as a reference for: 1) determining the interest payable, or other sums due, under loan agreements or other contracts relating to investments 2) determining the price at which investments may be bought or sold or the value of investments or 3) measuring the performance of investments. Nationwide Building Society is the owner of the trade mark “Nationwide” and all copyright and other rights in the Nationwide House Price Indices. The application of the IOSCO Principles on financial benchmarks to the NHPI is more fully set out in our statement regarding IOSCO Principles. Nationwide considers that its arrangements for administration of the NHPI comply with the IOSCO Principles in a proportionate manner having regard to the nature of the index.
