THE pace of house price growth softened in November, with values edging up by 0.1 per centmonth-on-month, Nationwide Building Society has reported.
The monthly price change is the weakest since property values dipped by 0.2 per centin June.
Property values now stand at £196,305 on average across the UK, which is 3.7 per centhigher than a year ago. In October, house prices recorded stronger annual growth of 3.9 per cent.
A year ago, house prices were surging at a much stronger annual rate, of 8.5 per cent.
Robert Gardner, Nationwide’s chief economist, said that year-on-year house price growth has ranged between 3 per centand 4 per centfor the last six months, bringing it more closely in to line with earnings growth.
Mr Gardner said that the softer annual pace of house price growth now being seen “bodes well for a sustainable increase in housing market activity in the period ahead” although “much will depend on whether building activity can keep pace with increasing demand”.
He continued: “Surveyors have continued to report a dearth of properties on the market in recent months, with the number of available homes reportedly at the lowest level since the late 1970s.
“Therefore it is positive that policymakers are focusing on the need to increase home building, with the Chancellor announcing a range of measures aimed at boosting housing supply in his Autumn Statement.”
Mr Gardner said the current rate of construction activity is “well below” that which is needed to keep up with predicted rates of household formation, with only 135,000 new homes being built in England in the 12 months to September 2015, compared with around 220,000 new households expected to form each year over the next decade.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “Despite the muted November performance reported by the Nationwide, we retain the view that house prices are likely to see solid increases over the coming months.
“Consequently, we expect house prices to rise by around 6 per centto 7 per centover 2016.”
The package of measures announced this week by the Government, aiming to boost the housing supply and help people on to the property ladder, has included plans to hike stamp duty costs for buy-to-let landlords and second home buyers.
From April 1 2016, people buying additional properties, such as buy-to-let properties and second homes, will pay an extra three percentage points above current stamp duty rates.
Some housing market experts have suggested that this move could spark a rush of people snapping up properties before the changes come into force. This would push up competition for homes and therefore prices.
Meanwhile, in the longer term, the move could also discourage people from investing in a buy-to-let home - potentially restricting the supply of rental properties and increasing prices for tenants, it has been argued.
Mr Archer said: “In the near term, it is very possible that the decision to impose a 3 per centsurcharge on stamp duty on purchases of buy-to-let properties and second homes from April 2016 will lead to an increase in housing demand and exert upward pressure on prices as prospective buyers look to beat the increase. Further out, the move could modestly dilute housing market activity and upward pressure on prices.
“While the Chancellor has announced measures aimed at boosting housebuilding in the Autumn Statement, it will be some considerable time before they have a significant impact on housing supply - and that is assuming that the measures prove successful.”