UK house prices cool as demand slows down

UK home prices increased at their slowest annual pace in 14 months in January as housing transactions and demand cooled.

The gain in value dropped to 6.8% from 7.2% in December. It was the lowest rate since November 2013 and the fifth consecutive slowdown, Nationwide Building Society said yesterday. Prices rose 0.3% on the month for a fourth straight increase.

“The further moderation in the pace of price growth is unsurprising, given the slowdown in housing market activity in recent months,” said Robert Gardner, chief economist at Nationwide.

“Surveyors continue to report subdued levels of new buyer enquiries.”

Britain’s housing market slowed last year, with home-loan approvals falling in November to their lowest since June 2013 after affordability was stretched and the Bank of England moved to prevent a buildup of unsustainable lending. The number of mortgages approvals is around 20% below the level seen at the start of 2014.

Still, Nationwide said an improving labour market and a shortage of homes for sale should support future housing demand.

“If the economic backdrop continues to improve as we and most forecasters expect, activity in the housing market is likely to regain momentum in the months ahead,” said Mr Gardner.

“Surveyors continue to report a dearth of new homes coming on to the market, which may help to explain why house-price growth has remained fairly robust.”

The average house price stood at £188,446 (€250,000) in January, according to Nationwide.

* Bloomberg