Affordability to ‘improve gradually’, according to bank’s chief economist
Nationwide’s chief economist has predicted a gradual improvement in housing affordability as the bank announced its latest housing price growth figures.
Its house price index for August showed that annual house price growth rates dropped to 2.1% from 2.4% in July. After accounting for seasonal effects, prices were down 0.1% month-on-month.
Robert Gardner, the bank’s chief economist, said the “relatively subdued” pace of price growth was understandable given affordability challenges.
Prices remain high compared to incomes, mortgage costs are three times pre-pandemic levels and cost of living pressures are continuing to make it difficult to raise a deposit.
However, Gardner predicted that affordability would “continue to improve gradually if income growth continues to outpace house price growth, as we expect”.
He added: “Borrowing costs are likely to moderate a little further if the bank rate is lowered again in the coming quarters.
“This should support buyer demand, especially since household balance sheets are strong and labour market conditions are expected to remain solid.”
In August, the average price of a house in the UK stood at £271,079.
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