New year: same old story
Annual house price growth finished 2017 at 2.5% with growth of 0.6% in December, according to the Nationwide Index. The strongest performing regions were the West Midlands with 5.3% growth and the South West at 4.8%. London was the only region to see price falls, but growth in the East of England and South East has slowed over the year. Price growth in 2017 exceeded our November 2016 forecast of 0.0% as price growth has spread out to the midlands and north much faster than we then anticipated.
The same number of RICS surveyors reported price falls as price growth in November, this is the lowest that confidence in price growth has been since March 2013. However, the majority of surveyors reporting falling buyer enquiries got substantially smaller in November reversing the trend set throughout 2017. This measure is now broadly in line with new instructions suggesting little pressure for house prices to move in either direction.
Consumers have a pessimistic outlook for the year ahead with a large majority thinking the economic situation will get worse in 2018 according to the GfK sentiment survey. This pessimism is unsurprising following a year of high inflation, peaking at 3.1%, and low wage growth. Throughout 2017 predictions about when CPI would peak and at what level were constantly revised. In spite of this the Monetary Policy Committee of the Bank of England remains confident that inflation will now start to fall and voted unanimously to keep the base rate the same in their December meeting.