U.K. House Prices Stagnate for First Time in 16 Months

(Bloomberg) -- U.K. house prices failed to rise in October and annual inflation slowed to the weakest since the start of the year, according to Nationwide Building Society.

The stagnation in values on the month ends 15 consecutive months of increases, Nationwide said on Wednesday. In its analysis of the market, it said measures of housing activity remain “fairly subdued,” with transactions about 10 percent down from a year earlier. Annual price growth slowed to 4.6 percent from 5.3 percent.

Mortgage approvals have declined since the start of 2016, and the British Bankers Association said last month that the property market “continues to show signs of underlying weakness.” According to the Centre for Economics and Business Research, Brexit will hurt U.K. housing and it forecasts that price growth will slow to 2.6 percent next year from an expected 6.9 percent this year.

Nationwide said the recent slowdown partly reflects the after-effects of the introduction of stamp duty on second homes introduced in April, which sparked a burst of demand earlier in the year.

“While the economic outlook is uncertain, solid labour market conditions and historically low borrowing costs should provide support to buyer confidence,” said Robert Gardner, chief economist at Nationwide. The balance of supply and demand is likely to stay “fairly tight,” he said, which support prices.

To contact the reporter on this story: Fergal O'Brien in London at fobrien@bloomberg.net.

To contact the editors responsible for this story: Craig Stirling at cstirling1@bloomberg.net, Zoe Schneeweiss, Hellmuth Tromm