According to Nationwide, house prices started to moderate in July. In Simon Morris’ opinion, this could be positive for UK property investment funds.
Simon Morris, Residential Property Expert
As a London-based property investment expert, Simon Morris acts in an advisory capacity to UK property investment fund. Simon’s experience allows him to ensure that UK property investment funds make high returns on their property-based investment portfolios.
Over the course of the national economic recovery, Simon has noticed the emerging robustness of the UK housing market; best typified by continually rising house prices. This is why the latest house price figures from Nationwide are extremely relevant for UK property investment funds.
House Prices Rise at Slowest Pace since April 2013
This week, the BBC reported that Nationwide revealed that growth in house prices began to moderate this month. The lender went on to say that house prices grew by just 0.1% in July. Not only is this down from the 1% rise registered in June, house prices have risen at their slowest pace since April last year. This means that the average UK house price now sits at £188,949.
To put this revelation into context, earlier this week the Land Registry noted a similar slowdown in house prices. According to the registry, they fell in seven out of ten UK regions in July. It also means that the yearly house price rise figure has entered moderation; down from 11.8% to 10.6%.
The Slowdown Was Not Entirely Unexpected
According to the national news service, Nationwide’s chief economist, Robert Gardner, spoke out on the recent figures. Gardner suggested that “the slowdown was not entirely unexpected, given mounting evidence of a moderation in activity in recent months.”
The chief economist went on to point out that “there has also been some softening in forward looking indicators, such as new buyer enquiries.” At face value, this could be seen as bad news for UK property investment funds with an interest in the residential market. A moderation of prices, along with a softening of forward looking indicators, suggest that the UK housing market could be losing steam. Essentially, this could mean residential properties are less profitable for an investment funds’ property portfolio.
Simon Morris Comments on July UK House Prices
Whilst this could be the case, Simon Morris would suggest that these figures may be positive news for UK property investment funds. This could indicate that the UK housing market is stabilising, after a long period of unparalleled growth. Theoretically, this could suggest a safer income stream for residential property, as the residential housing bubble is not rising so rapidly it is in danger of bursting.
Only future figures will reveal whether this observation is grounded in reality, and if UK property investment funds can continue to reap significantly high returns on their portfolios through residential property.