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UK house price growth slows to its lowest pace since 2013

7 March 2017

11:34 AM

7 March 2017

11:34 AM

As a nation, we obsess. We obsess about the weather, taxes, the state of the roads, death and the cost of milk. I could go on. And there’s one other thing uppermost in our minds: house prices.

I’ve lived in the same place for six years but I still can’t pass an estate agent without glancing in the window. I keep a close eye on house prices in my local area – are they, up, down, static – and I regularly calculate the amount of equity in my property. Yet I have no intention of moving.

I’m not alone in all this, which goes some way to explain why house price indices are followed so closely. It’s not just about first-time buyers, upsizers, downsizers or any of the other categories of home-movers; we all care about the cost of what will probably be our biggest ever financial outlay.

And so to today’s house price index from Halifax. The figures reveal a ‘steady as she goes’ picture of the UK housing market, according to some analysts. This is despite the bank’s statistics showing that the annual rate of growth in UK house prices has slowed to its lowest pace in three and a half years.

Halifax says that house prices in the three months to February were 5.1 per cent higher than in the same period a year ago, down from 5.7 per cent in January and the lowest since July 2013. Meanwhile, prices in the three months to February were 1.7 per cent higher than in the preceding quarter, and down from 2.3 per cent in January. All this means that the average price of a house is now £219,949.


Martin Ellis, Halifax housing economist, said: ‘Housing demand is being supported by an economy that continues to perform well with employment still expanding. Meanwhile, the supply of both new homes and existing properties available for sale remains low. This combination is pushing up prices.

‘The annual rate of house price growth has, however, nearly halved over the past 11 months. A sustained period of house price growth in excess of pay rises has made it increasingly difficult for many to purchase a home. This development, together with signs of reduced momentum in the jobs market and squeezed consumer spending power, is expected to curb house price growth during 2017.’

So the outlook for this year isn’t brilliant. But housing experts are not entirely downhearted.

Rob Weaver, director of investments at property crowdfunding platform Property Partner, said: ‘House price growth may no longer be stretching to double digits but it’s still climbing, albeit now more slowly.

But the real disappointment in today’s Halifax figures is that housebuilding last year fell, with a marked slowdown in new housing completions in the final quarter of 2016. If the UK is to fix its broken housing market, it needs radical solutions. There was a lukewarm reception for the recent housing white paper – all ears will now be on tomorrow’s Spring Budget in eager anticipation of any incentives to get Britain building affordable homes.’

The Chancellor is under pressure to fix the ‘broken’ market, and we’ll find out tomorrow if he has worked out a way to do it. In the meantime, there’s always the next house price index to look forward to. You won’t have long to wait.

Helen Nugent is Online Money Editor of The Spectator


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