The number of homes on the market has remained close to all-time lows.
UK house price growth softened in September withgrowth levels falling to 5.3% in September, down from 5.6% in August, latest figures fromNationwide show.
While buyer enquiries have reduced, the number of homes on the market has also remained low, sustaining levels of demand.
Robert Gardner, chief economist at Nationwide, said: “The relative stability in the rate of house price growth suggests that the softening in housing demand evident in recent months has been broadly matched on the supply side of the market.
“Survey data indicates that, while new buyer enquiries have remained fairly subdued, the number of homes on the market has remained close to all-time lows, in part due to low rates of construction activity.”
Figures also published for Q3 also show the south east of England recording the strongest gains, while price growth slowed in the Outer Metropolitan region from 12.4% in Q2 to 9.6% in Q3.
House price growth remained subdued in Scotland (+2%) and Northern Ireland (+2.4%), and small price declines were recorded in Wales (-0.5%) and the North of England (-0.2%), compared with Q3 last year.
Gardner added: “The number of new homes built in England has picked up, but is still not sufficient to keep up with the expected increase in the population. In the four quarters to Q2 2016, 139,000 new houses were completed, 30% higher than the low point seen in 2010. However, this is still around 15% below the average rate of building in the five years before the financial crisis and 38% below the 225,000 new households projected to form each year over the coming decade.
“With interest rates expected to remain low and schemes, such as Help to Buy, helping to provide those with smaller deposits access to finance, housebuilders should have confidence that there will be sufficient demand from buyers if more homes are built. The major housebuilders appear to have capacity to expand output, with most reporting land banks that could support around five years’ worth of construction at current rates of building activity. However, there is a risk that the uncertain economic outlook may weigh on activity in the period ahead."
Andrew McPhillips, chief Economist at Yorkshire Building Society, said:"Although house prices are showing stable growth, they are still rising faster than people are able to afford on an annual basis. For the bulk of the country the referendum outcome has had no discernible impact and it remains to be seen whether the process of negotiating an exit from the EU will affect confidence.
†ª"In order to make house prices more affordable, we must build more properties to ensure that there are enough homes available to buy. Tackling the 1.2m housing deficit is likely to take a number of years, so the government should look to introduce measures to alleviate the effects of the housing crisis in the short term."
Peter Ball, chief executive of retail at Together, added: “With low interest rates and strong consumer credit growth, consumer sentiment remains positive. House prices have continued to steadily grow suggesting that Brexit has not had the impact that some forecasters had feared.
“Indeed, our recent research revealed that consumers still have confidence in the value of their property with only 20% of homeowners or prospective buyers expecting the referendum to impact their property price. The British public were found to be far more concerned about the impact of Brexit on their cost of living (60%).”
And Ian Thomas, co-founder and director at LendInvest, said:“September is traditionally a month when the housing market begins to pick up steam, with the holiday period coming to an end. As such, these figures are a useful barometer for what happens next. While transactions have certainly slowed in prime central London following the additional Stamp Duty charge on second homes and the Brexit vote, there is clearly a strong desire to buy across much of the rest of the country.
“The Housing Minister Gavin Barwell has made positive noises about recognising the need for all types of new homes, rather than simply focusing on owner occupation. But it will take time to tackle the structural housing shortage that has built up over decades. That shortage will act as a brake on any house price softening we may see in the months to come.”
