MortgagesFeb 13 2015

House price growth slows to ten-month low

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House price growth slows to ten-month low

House prices have slowed to the smallest yearly improvement witnessed for 10 months, at 7.5 per cent annual growth, representing a deceleration from 8.9 per cent in December, according to LSL’s house price index for England and Wales.

Overall prices started climbing again in January, with values in the North experiencing the biggest boost, while the average house price was £277,857.

Adrian Gill, director of Reeds Rains and Your Move estate agents, said: “After some recent price falls, average property values haven’t taken any steps forward from where they stood in November – and what we’re seeing is a far cry from the marathon of monthly increases that set off this time last year.

“In a reversal of fortune, London is leading this slowdown. The capital has long been the propeller driving forward growth, but after cruising ahead at full speed in 2014, the London property market has run aground momentarily.

“Average London house prices experienced the biggest drop during December (1.1 per cent), but this is just a symptom of the unsustainable rate of growth that the market stretched to last year, as the capital now takes a pause.”

Data from the Royal Institution of Chartered Surveyors yesterday (12 February) confirmed that London house price growth had slowed at the start of this year, overtaken by Scotland and Northern Ireland.

Mr Gill added that while a prospective mansion tax and higher rate of stamp duty on million pound homes may be a blot on the buying landscape at the top end, everyday buyers are simply able to take their time to deliberate and get their finances in order now that market conditions have rationalised again.

“With a greater supply of available homes on the market, we are striking a better balance between sellers and buyers, and at the bottom rungs of the ladder in particular, demand remains vibrant.

He commented that the London story acts as a miniature model of what is happening in the rest of the UK housing market. “The market is temporarily treading water at the higher end, but fast-moving in areas where price growth has been more modest, and where cheaper properties are within reach of new buyers and borrowers who can access Help to Buy.

Overall, completed home sales in January dipped a slight 0.5 per cent compared to a year ago, but according to Mr Gill, with stamp duty savings now sweetening the deal and low mortgage rates fostering a host of competitive long-term fixes, home ownership is breeding further confidence in the market.

ruth.gillbe@ft.com