UK house prices grew an anaemic 0.1 per cent month-on-month in August as housing supply improved, while year-on-year growth fell below 10 per cent for the three months to August, according to a key index.
FTAdviser sister title FastFT reports that the Halifax House Price Index showed 9.7 per cent annual growth, down from 10.2 per cent in July and below expectations of 9.9 per cent from economists polled by Reuters.
Price growth has been easing over the summer as tougher lending criteria has been introduced for mortgages. While prices increased a revised 1.2 per cent month-on-month in July, they had fallen by 0.6 per cent in June - the fourth monthly decline since last December.
Martin Ellis, Halifax housing economist, said: “Earnings growth that remains below consumer price inflation, and the prospect of an interest rate rise at some point over the coming months, are likely to curb demand.
“There are some signs of an improvement in housing supply, both in terms of more second-hand properties coming onto the market and increased numbers of new homes.
“These trends, if sustained, should help to improve the balance between supply and demand, contributing to an easing in the pace of house price growth.”
The Bank of England’s Financial Policy Committee announced in late June that lenders should limit mortgages with a loan-to-income ratio of 4.5 or over to 15 per cent of their lending, and must test whether borrowers are able to afford their mortgage if the prevailing mortgage rates were to increase by three percentage points over the first five years of the loan.
