Thursday 19th March 2015

UK house price growth continues to slow

According to Nationwide’s latest monthly House Price Index, annual house price growth saw a further softening in February, down to 5.7% from 6.8% in January. Annual growth has now slowed for the sixth consecutive month, with house prices falling by 0.1% month on month. 

Despite the wider economic backdrop being supportive of the housing market - with mortgage rates remaining close to all-time lows, consumer confidence still buoyant, unemployment down and earnings on the up - activity has still been fairly passive.    

In addition, the downward trend of home ownership continued. “After rising almost continuously over the course of the twentieth century, the rate of home ownership in England has been declining steadily since 2003,” Robert Gardner, Nationwide's Chief Economist, commented. “Home ownership is now at its lowest rate for almost thirty years and is eight percentage points below the all-time high of 70.9% in 2003.”

Furthermore, among owner occupiers, the amount of people owning their home outright also overtook the proportion owning with a mortgage in 2013/14.

There has also been a sharp decline in the number of younger owner occupiers in the last decade, not helped by stalling wages, rising house prices and tighter restrictions on mortgages. “Among 25-34 year olds, traditionally the segment containing most first-time buyers, the proportion of households owning their own home fell from 59% to 36% between 2004 and 2014,” Gardner added. 

“Over the same period, the proportion renting (either privately or through a local authority or housing association) increased from 41% to 64%.  For 16-24 year olds, the proportion renting increased from 76% to 91% over the same period.”

However, despite the rises in the number of people renting a home in recent years, the aspiration to eventually become a homeowner remains undimmed. “The most recent English Housing Survey suggests that 25% of people in social housing and 61% of those in the private rental sector expect to be able to buy their own home in future,” Gardner concluded. “However, this remains a longer term aspiration, with around half of renters expecting it to take five years or more to take their first steps into the housing market.”