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The pace of UK house price growth was steady in November from October, according to a closely watched report, contrasting economists’ expectations for an uptick and underscoring the impact of weaker consumer spending power on the housing market.

House prices increased 2.5 per cent in November from the same month in 2016, according to data from Nationwide Building Society, the lender. The figure was weaker than the 2.7 per cent that was forecast by economists in a Reuters poll, and marks a significant decline from the 4.4 per cent pace notched last November.

Prices were up 0.1 per cent in November from October, weaker than the 0.2 per cent rise recorded in the September to October period.

Howard Archer, head economic advisor at the EY Item Club, said, “[UK] housing market activity is currently muted and faltering.”

“Low mortgage rates and healthy rates of employment growth are providing support for demand, but this is being partly offset by pressure on household incomes, which appears to be weighing on confidence,” added Robert Gardner, Nationwide’s chief economist. He said that a lack of homes on the market was also “providing support to house prices.”

Looking ahead, Mr Archer said:

The fundamentals for house buyers are likely to remain challenging over the coming months with consumers’ purchasing power continuing to be squeezed by inflation running higher than earnings growth. Additionally, housing market activity is likely to be hampered by fragile consumer confidence and limited willingness to engage in major transactions.

(Chart source: Nationwide)

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