Robert Gardner, Nationwide's Chief Economist, does not seem too worried. He said that “while real incomes are again coming under pressure as inflation has overtaken wage growth, the number of people in work has continued to rise at a healthy pace. Indeed, the unemployment rate fell to a 42-year low in the three months to March.”
What about the election, what effect is that having?
He continued: “If history is any guide, the slowdown is unlikely to be linked to election-related uncertainty. Housing market trends have not traditionally been impacted around the time of general elections. Rightly or wrongly, for most home buyers, elections are not foremost in their minds while buying or selling their home.”
In fact, the Nationwide has been looking at the effect of elections and indeed last year’s referendum on house prices. Mr Gardner said: “On the whole, prevailing trends have been maintained just before, during and after UK general elections. Broader economic trends appear to dominate any immediate election-related impacts.
“We also examined how activity, in particular house purchase mortgage approvals, responded to past UK general elections. Here the picture is less clear, but again there does not seem to be any clear impact in the three months either side of a general election.“
So how serious is the current slowdown?
Mr Gardner said that “It is too early to conclude whether the slowdown in house price growth is merely a blip, a reflection of the impact of the squeeze on household budgets, or is due to mounting affordability pressures in key areas of the country. “
But he did say that the economic outlook is “unusually uncertain” and that “housing market trends will depend crucially on developments in the wider economy.”
Yet he maintains a veneer of optimism, not that everyone sees rising house prices as good news, He said: “In our view, household spending is likely to slow in the quarters ahead, along with the wider economy, as rising inflation increases the squeeze on household budgets. This, together with mounting housing affordability pressures, is likely to exert a drag on activity and house price growth in the quarters ahead.
“However, the subdued level of building activity and the shortage of properties on the market are likely to provide support for prices. As a result, we continue to believe that a small increase in house prices of around two per cent is likely over the course of 2017 as a whole.”