Growth in Price of UK Houses Continues to Slow
The mortgage lender Nationwide has released figures revealing house prices are increasing at the slowest rate since 2013.
The price of a UK property went up by an average of 0.3% in January, leaving average annual growth at 6.8%, which is the most sluggish it has been since November 2013. Moreover, it was the fifth month in a row where the pace of growth has slowed, with the trend emerging in the latter half of 2014.
The housing market has quietened in recent months and this have been reflected by the fact that mortgage approvals are down a fifth on what they were a year ago. Halifax have said they expect house price growth to continue to slow in 2015.
Robert Gardener who is the chief economist for Nationwide stated in December: ìAll regions except the north of England saw a slowing in annual price growth in the final quarter of 2014. London was the top performing region for the second year running.î
In response to the more recent news in January, he stated: ìThe further moderation in the pace of price growth is unsurprising, given the slowdown in housing market activity in recent months. The number of mortgages approved for house purchase has been around 20% below the level prevailing at the start of 2014 and surveyors continue to report subdued levels of new buyer enquiries.î
Further to the data released by Nationwide, the Land Registry released figures showing that the average value of a property in England and Wales in December 2014 was £177,766. In London however the average was a staggering £464,936 in comparison.
The slowdown in the inflation of house prices is in tandem with the fact that mortgage approvals fell in number for the six consecutive month in December.
In addition, the amount of new households built in the year prior to September 2014 had increased by 8% on the year before. However, that amount was 34% down on the levels before the financial crisis.
Mr Gardner was somewhat ambivalent when it came to explaining the trend. He said: ìThe reasons for the slowdown in activity remain unclear. Unemployment has continued to decline and wage growth has started to outstrip increases in the cost of living for the first time since the financial crisis. Surveys suggest that consumer confidence remains elevated ñ a view corroborated by healthy gains in retail sales over recent months.î
Despite the uncertainty over the causality, he gave a more optimistic appraisal of the future in comparison to the one given by Halifax. Mr Gardener maintained: ìIf the economic backdrop continues to improve as we and most forecasters expect, activity in the housing market is likely to regain momentum in the months ahead.î
Ed Goodworth, a real estate partner at BDO, commented: ìWhile the fifth month of slow house price growth is encouraging for those trying to get on the housing ladder, weíre unlikely to see a full scale correction at this stage. There is not enough development activity taking place to meet demand, and so it can only be a matter of time before the pressure on the housing market causes prices to rise again.î
Despite the discord between experts in the field, it is safe to say that it is a good time to purchase a home. If you are in the market for a property then ensure you look around for the best deals and utilize the fact that there are extremely competitive mortgage loan tariffs available. The slowdown in house price growth is surely a bonus!