Reports Reveal House Price Growth Continues to Slow

There has been a slowdown in annual house price growth across the UK in recent months, with prices in the three months to February only 1.8% higher than the same three months last year, compared to the annual growth of 2.2% recorded in January. 

House Price Changes

The latest House Price Index from Halifax also revealed that:

  • House prices in the latest quarter (December-February) were -0.7% lower than in the preceding three months (September-November), the first decline on this measure since May last year
  • On a monthly basis, prices grew marginally by 0.4% in February, following two consecutive monthly falls
  • The average price in February was £224,353, down slightly from November’s high of £226,408

“House prices continue to remain broadly flat, as they have since the end of last year,” commented Russell Galley, Managing Director, Halifax. “The annual rate of growth has slowed from 2.2% in January to 1.8% in February, the lowest rate of growth since March 2013.”

“The labour market continues to perform strongly with the number of people in employment rising by 88,000 in the three months to December,” he said. “Notably, this is almost entirely accounted for by full-time jobs. The strength of the jobs market may finally be benefitting wage growth, with the annual growth rate accelerating from 2.3% in November to 2.8% in December. However, earnings are rising at a slower rate than consumer prices.”

“Despite the November rise in the Bank of England Base Rate, mortgage rates continue to stay low by historical standards,” he added. “While we expect price growth to remain low, the low mortgage rate environment, combined with an ongoing shortage of properties for sale, should continue to support house prices over the coming months.”

Property Sales

Looking at sales figures, the Index found that monthly UK home sales exceeded 100,000 for the thirteenth month in succession. Sales have apparently remained above 100,000 in all months since the start of 2017. In January they reached 102,610, the highest monthly level since April 2017. In the three months to January home sales were 2% higher than in the same period a year earlier.

However, the Index also highlights that indicators of housing demand and supply remain weak. For the tenth month in succession new buyer enquiries have fallen. The lack of new instructions coming to market continues to impede activity and new instructions have now fallen for 23 consecutive months – the worst sequence since 2007-2009.

Nationwide Report Reveals Similar Findings

The findings of the Halifax House Price Index have been echoed by a recent report from Nationwide, which also found evidence of a slowdown in house price growth.

According to the figures from Nationwide, annual UK house price fell to 2.2% in February, compared to 3.2% the previous month. On a monthly basis, house prices fell by 0.3% in February compared to January.

The Nationwide report also gives an interesting insight into the level of property wealth held across the UK. It found that net property wealth is the second largest store of household wealth after private pension wealth and amounted to around £4.6 trillion over the July 2014 to June 2016 period - equivalent to around two and a half times UK output in 2016.

The wealthiest 10% of households apparently hold around 44% of total household wealth, 46% of private pension wealth, 40% of net property wealth and 60% of other financial wealth.

In contrast, the lower 50% of households hold less than 10% of total wealth, property wealth and private pension wealth, and just 2% of other financial wealth

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