Annual house price growth slowed for the fourth month in a row to 7.2 per cent in December from 8.5 per cent in November, Nationwide data has revealed.
Nationwide’s monthly house price index, published today (30 December) revealed that UK house prices rose by just 0.2 per cent in December and by 7.2 per cent over the course of 2014, after rising by 8.4 per cent in 2013.
The average price of a house at the end of this year is therefore £188,559.
Robert Gardner, Nationwide’s chief economist, commented that while cooling in the London market is a part of the story, it is not the main explanation for the slowdown in recent months.
“Indeed, annual price growth in the capital continued to outpace every other region in the UK, at 17.8 per cent in Q4. Overall, 12 of the 13 UK regions saw the pace of annual price growth slow.
“In many respects the regional pattern prevailing in 2013 remains in evidence, with the south of England recording significantly stronger rates of house price growth than Wales, Scotland and the North of England.”
He added that the number of mortgages approved for house purchase fell to their lowest level for 16 months in October - 22 per cent below the level prevailing at the start of the year.
“The slowdown in housing market activity is surprising given further steady gains in employment, a pickup in wage growth (albeit from low levels) and the continued low level of mortgage rates. Moreover, surveys suggest consumers remain in high spirits – a view reinforced by robust retail spending growth in November, which was at its highest for over a decade.”
Mr Gardner suggested that if the economic backdrop continues to improve as most forecasters expect, activity in the housing market is likely to regain momentum in the months ahead.
“Supply side developments will be crucial in determining the trajectory for prices. There are encouraging signs that construction is starting to pick up. Hopefully, this will set the stage for house price growth gradually converging with income growth in the quarters ahead.”
Changes to stamp duty announced in the Autumn Statement may help stimulate housing market activity, according to Nationwide.
“The new marginal SDLT should help to remove the distortions caused by the slab structure, which led to a clustering of transactions. The greatest impact is likely to be for homeowners looking to buy property just above £250,000, who could save around £5,000 in tax,” noted Mr Gardner.
“Based on 2013/14 transactions data from the Land Registry, nearly 590,000 purchasers in England and Wales would benefit under the new regime, with an average benefit of c£1,600. The benefits will be greatest in the south of England where average house prices are higher.”
peter.walker@ft.com
