The Nationwide House Price Index is always one of the most reliable indicators of how the housing market is going, something that everyone from those working in the industry to would-be buyers rely on for evidence of the latest trends.
What the August survey tells us is that the market is in a state of slow but gradual recovery, with plenty of good reasons to expect this to pick up more in the months ahead. It is not enough to have estate agents rushed off their feet, but activity is certainly heading in a positive direction after a difficult last couple of years.
Although prices actually fell marginally month-on-month from July (0.2 per cent), the annual figure was up by 2.4 per cent, compared with 2.1 per cent in July. This is still below the 2022 peak, which is a clear indicator of the impact the cost of living crisis and a series of interest rates have had on the market since then.
What this means for prospective buyers is that now could be a very good time to buy. Prices are below what they were two years ago but won’t stay that way for too much longer, inflation is low so the squeeze on incomes has diminished, and the Bank of England base rate has begun to fall.
The latter issue needs careful consideration. On the one hand, the vote to cut the base rate last month was by a knife-edge 5-4 vote, suggesting the pros and cons were very keenly balanced and there is no mood for a series of further cuts anytime soon.
On the other, mortgage borrowers can be encouraged by the way lenders have taken their cue from this reduction to cut their own borrowing rates, with Natwest, Barclays and HSBC among the latest to do so.
Nationwide’s chief economist Robert Gardner said: “Housing market activity is likely to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth”. That suggests now is the time to buy before a stronger market recovery starts to drive house price inflation up.
