British House Prices Experience First Monthly Drop

By William Schomberg
LONDON (Reuters) – British house prices unexpectedly fell in August for their first monthly drop since April, but the outlook for the property market is likely to strengthen, according to Nationwide Building Society, a major mortgage lender.

House prices slipped by 0.2% on the month, as reported by Nationwide.

Economists polled by Reuters had forecast prices would rise by 0.2% from July.

In annual terms, prices were 2.4% higher than in August last year, marking the fastest increase since December 2022. However, this gain was smaller than the median forecast of 2.9% in the poll.

Robert Gardner, Nationwide’s chief economist, stated that while the housing market remains subdued, it is coping with rising interest rates. He mentioned, “Providing the economy continues to recover steadily, as we expect, housing market activity is likely to strengthen gradually as affordability constraints ease.”

The Bank of England cut interest rates on August 1 to 5% from a 16-year high of 5.25%. Investors are predicting a 25% chance of another quarter-point cut by the Bank of England in September, and a full expectation of a cut in its November meeting.

Recent surveys indicate emerging momentum in the housing market. Lloyds Bank reported that confidence in the construction sector jumped by 14 points to 58% in August. Additionally, the Royal Institution of Chartered Surveyors noted that its measure of expected sales over the next three months is the strongest since January 2020, just before the coronavirus pandemic affected Britain.

Despite these positive signs, a shortage of properties on the market is likely to continue supporting house prices in the medium term. The new government has pledged to accelerate home-building efforts and announced a group of experts to expedite housing projects delayed by planning and red tape.