House price growth negative at the start of a hard year for the consumer
The Nationwide index reported a -0.3% house price fall in March 2017, the first negative monthly growth reported since 2012. The quarterly regional indices reported price falls across four regions, including the East of England which was the strongest region throughout 2016. The South West saw the strongest quarterly growth of 2.2%.
These tentative signs of weakening price growth come at the beginning of a hard year for the consumer, which will be a constraint on the housing market. Once again the Monetary Policy Committee (MPC) voted in March to keep the Bank of England base rate at 0.25%. But the Financial Policy Committee (FPC) is increasingly concerned about weak underwriting standards for unsecured lending. If their concerns are justified, this could lead to a tightening of consumer credit. Early indicators point towards slowing economic activity. GDP growth is forecast to slow from 0.7% in Q4 2016 to 0.5% in Q1 2017.
The RICS survey reported a fall in the number of new instructions. The number of surveyors reporting an increase in buyer enquiries is now equal to the number reporting falls. Despite this, transaction volumes returned to the levels seen before the distortion of the April 2016 stamp duty change for the first time in January, according to the seasonally adjusted HMRC figures. First time buyers is still the only growing buyer group with home mover and buy-to-let transaction volumes remaining flat.