The housing market is on course for its worst performance in five years as the outlook for prices “remains clouded” by economic uncertainty, lender Nationwide said today.
The mutual’s latest index registered a tepid 0.2% rise in prices during January — much weaker than December — taking annual growth in property prices down to 4.3%.
But the lender believes worse is to come this year as the Nationwide forecasts price growth slowing to 2% — the weakest since 2012, when prices fell 1%.
“The outlook for the housing market remains clouded, reflecting the uncertainty surrounding economic prospects more broadly,” Nationwide’s chief economist Robert Gardner said.
Though the economy has surprised with its resilience since June’s Brexit vote — registering 0.6% growth for two quarters running — and mortgage rates are cheap, Nationwide also flagged up a slowing jobs market and inflation eating into pay packets because of the sharp fall in the pound since the referendum.
“We agree with the consensus view that the economy is likely to slow through this year,” he added.
Samuel Tombs, of Pantheon Macroeconomics, said: “The decline in consumer confidence and slowdown in income growth towards the end of last year is weighing on price momentum. Looking ahead, lenders are likely to increase mortgage rates soon to account for the recent rise in swap rates.”