House price growth at slowest rate in five years

House prices have increased at their slowest rate since March 2013 at just 1.5% higher than last year, according to latest figures from Halifax.

House prices have increased at their slowest rate since March 2013 at just 1.5% higher than last year, according to latest figures from Halifax.

Property prices slowed from 2.5% annual growth in September to 1.5% in October, with the average house price now standing at £227,869.However, on a monthly basis, property prices went up slightly – by 0.7% – in October.

This mirrors Nationwide's house price index earier this week, which also revealed a five-year low as the squeeze on household budgets and Brexit uncertainty continue.

Halifax points out that annual house price growth is still within the range it forecast for 2018 of 0 to 3%, with managing director Russell Galley seeing this continuing being the case as we head into the New Year.

He says: “House prices continue to be supported by the fact that the supply of new homes and existing properties available for sale remains low. Further house price support comes from an already high and improving employment rate and historically low mortgage rates, which are creating higher rates of relative affordability.”

Commenting on Halifax’s data, Jonathan Samuels, chief executive of property lender Octane Capital, says: “Faced with unprecedented political and economic uncertainty, the property market has gone into lockdown mode. We’re at that point in the cycle where there are considerably more reasons to sit tight than start scanning property websites. The monthly uptick rings hollow when juxtaposed alongside the annual growth rate, the lowest since 2013.

“The strong jobs market and continued low borrowing rates mean transactions are still taking place, but overall home sales are pancake flat. There’s very little stock on the market and the lack of choice, for many people, means the incentive to buy simply isn’t there.

“Moving home is a major financial commitment and right now the headwinds of Brexit are causing many people to batten down the hatches.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, is more optimistic: “Property prices are still rising largely because of stock shortages, albeit more slowly than they have been. Slightly disappointing news tends to have a disproportionately negative effect on an already fragile housing market. “On the ground, realism is hitting home to many sellers who are starting to appreciate that the first offer they receive could very well be their only one, however unpalatable it may be.

“However, listings are increasing and four out of five sellers are said to be buyers so there are some small grounds for optimism when the Brexit fog finally clears.'

This article was originally written by our sister publication Moneywise.

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