UK house-price growth drops below 2% for first time since 2013

UK house-price growth dropped below 2% for the first time in five years, according to Nationwide Building Society.

In what it said was a “relatively subdued” market, average values rose 1.6% in October compared with a year earlier. That’s the weakest increase since mid-2013.

Nationwide reiterated its forecast for prices to rise about 1% this year.

The report on Thursday is more evidence Britain’s housing market is weakening after decades of booming prices. Stretched affordability is partly behind the pullback, while Brexit has created additional uncertainty about the economic outlook.

The Bank of England, which announces a policy decision at noon in London, says any interest-rate increases over the next few years will be limited and gradual as it lifts borrowing costs from historical lows.

“The squeeze on household budgets and the uncertain economic outlook is likely to have dampened demand, even though borrowing costs remain low by historic standardsand unemployment is at 40-year lows,” said Robert Gardner, Nationwide’s chief economist.