UK house-price growth-rate slows

The average asking price for a house in England and Wales reached £224,802 (€334,00) in February but a fall in the annual growth rate suggests a cooling market, figures today indicated.

Year-on-year inflation saw its sharpest drop for 18 months, down from 13.5% in January to 11.5%.

A monthly increase of 0.9% added around £2,000 (€2,969) to the typical asking price of a house, but it is by far the lowest February rise in the last five years, according to Rightmove.

Since the property website began to compile its index five years ago, asking prices in February have always shown an increase greater than 2% on the previous month.

The apparent slowdown comes despite reports from estate agents of good levels of activity and an increase in stock turnover.

The amount of time it takes to sell a property on the market has fallen from 88 days to 78.

According to Rightmove, these contradictory statistics point to the shock January interest rate knocking sellers’ traditional New Year optimism

Miles Shipside, commercial director of Rightmove, said: “The shock tactic of one unexpected rate rise early in the year appears to have had the desired effect. February price rises are normally two to three times higher than we have measured this month.

“With three interest rate rises in the last six months and the looming threat of another, it looks like we have finally reached the point where the market is highly interest-rate sensitive.

“We are at a crossroads, and the path taken by those in charge of interest rate policy will dictate the direction of the housing market in 2007.”