28-02-2018 / Nationwide
After picking up unexpectedly in January, UK house price growth fell back in February, to 2.2% from 3.2% the previous month. House prices fell by 0.3% over the month, after taking account of seasonal factors.
Month-to-month changes can be volatile, but the slowdown is consistent with signs of softening in the household sector in recent months. Retail sales were relatively soft over the Christmas period and at the start of the new year, as were key measures of consumer confidence, as the squeeze on household incomes continued to take its toll.
How the housing market performs in the year ahead will be determined in large part by developments in the wider economy and the path of interest rates. Brexit developments will remain a key factor, though these remain hard to foresee. We continue to expect the UK economy to grow at modest pace, with annual growth of 1% to 1.5% in 2018 and 2019. Subdued economic activity and the on going squeeze on household budgets is likely to exert a modest drag on housing market activity and house price growth.