Early 2016 expected to bring about 'modest price growth' for housing market

Early 2016 expected to bring about 'modest price growth' for housing market

The early months of 2016 are expected to return a 'moderate' pace of growth in terms of property prices, according to the latest report from Nationwide, which said that January has seen a slight slowing on December's price increases. 

In December of 2015, the rate at which prices grew was unseasonally high, being recorded at around 0.8 per cent, according to Nationwide. This means that the still steady 0.4 per cent growth in January was seen as having been a drop from that seen in December. 

However, January's rise in prices means that the annual rate of growth remains at a modest 4.4 per cent, sitting well within the parameters of between three per cent and five per cent growth that has been in evidence across the UK in every month since the summer. 

January's price growth on an annual basis was also only slightly slower than the 4.5 per cent year-on-year increase that was recorded in December. 

"As we look ahead, the risks are skewed towards a modest acceleration in house price growth, at least at the national level. The labour market appears to have significant forward momentum," said Robert Gardner, Nationwide's chief economist. 

"Employment has continued to rise at a robust rate in recent months and, while the pace of earnings growth has slowed somewhat, in inflation adjusted terms regular wages continue to rise at a healthy pace," he added.

With this in mind, and the continued low interest rates seen across the UK, it's likely that the price of property will continue to grow at a steady pace for some months to come, with demand for homes likely to be sustained for at least the foreseeable future. 

"The concern remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability. Indeed, the market is already characterised by a shortage of stock, with the Royal Institute of Chartered Surveyors reporting that the number of properties on estate agents’ books remains close to all-time lows," said Mr Gardner.