The lender has reiterated predictions that consumer confidence will fall over the coming months, which could exacerbate the economic slowdown, and will affect the housing market.
Nationwide also anticipates that falling corporate profitability will cause the pace of earnings and employment growth to ease, resulting in weaker house price growth and lower house sales.
However, the UK’s largest building society reports that the country should avoid a recession and there will only be a relatively modest increase in unemployment as a result. Consequently, prices will continue to rise next year but at a slower sustainable rate.
Alex Bannister, group economist at Nationwide, said: ”... so far there has been only a modest easing in the upward trend in price growth, despite uncertainty since September 11. This is because households generally remain confident about their own financial prospects and the outlook for the housing market. With the UK economy continuing to slow this year in the face of a possible US recession, confidence and job prospects are likely to diminish, which will slow the growth in house prices."
