MortgagesMar 2 2015

Annual house price growth continues to slow: Nationwide

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Annual house price growth continues to slow: Nationwide

New data has revealed that annual house price growth has slowed down for the sixth month in a row, and recorded a slight fall in monthly movement.

Nationwide’s monthly house price index revealed that annual house price growth fell to 5.7 per cent in the 12 months to February, a fall from the 6.8 per cent recorded in January.

The average, not seasonally adjusted house price stood at £187,964 last month.

The last update showed that UK house prices rose by 0.3 per cent in January, up from 0.2 per cent in December, but this figure slumped to -0.1 per cent in February.

Last month LSL’s house price index for England and Wales also showed house prices 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.

This led to Halifax reporting that house price optimism fell to its lowest level for 18 months in January, as lending got off to sluggish start.

Robert Gardner, Nationwide’s chief economist, explained that February’s figures were the sixth month in a row in which annual growth moderated.

“Mortgage rates remain close to all-time lows and consumer confidence remains buoyant thanks to a further steady improvement in labour market conditions.

“Nevertheless, the pace of housing market activity remains fairly subdued.

“There was a small increase in the number of mortgages approved for house purchase in December, up 2 per cent from 59,000 in November to 60,300 in December, though it remains too early to determine whether this marks a turning point in activity.”

Meanwhile, the rate of home ownership in England is now at its lowest rate for almost thirty years, 8 per cent below the all-time high of 70.9 per cent in 2003.

There has also been a sharp decline in proportion of younger owner occupiers. In particular, among 25-34 year-olds, traditionally the segment containing most first time buyers, the proportion of households owning their own home fell to 36 per cent from 59 per cent between 2004 and 2014.

Over the same period, the proportion renting - either privately or through a local authority or housing association - increased to 64 per cent from 41 per cent.

Mr Gardner stated: “The increase has occurred in the private rental sector, which currently houses 19 per cent of total households - the highest share since the 1960s.

“Over the past ten years, the number of privately rented households has nearly doubled to 4.4m, while the percentage of households in social rental properties has declined from 18 per cent to 17 per cent.”

peter.walker@ft.com