British house price inflation slows as sales decline

HOUSE prices in England and Wales increased at the slowest pace in more than a year in the second quarter as sales declined, figures released yesterday show.

The average cost of a home rose 12.52% to €214,192 or stg£149,935 in the three months through June from the same period a year ago, the Land Registry said. That was the smallest gain since the first quarter of 2002 and down from growth of 19.7% in the first three months of the year.

“Our central scenario remains of a soft landing for the housing market,’ said George Buckley, an economist at Deutsche Bank AG in London. “Outright and persistent declines in house prices are off the agenda in the near term, but inflation will weaken sharply in the latter half of this year.”

British house-price inflation has dropped from a peak of almost 30% in the final quarter of last year. Surging home values have underpinned consumer spending that accounts for two-thirds of Europe’s second-biggest economy.

The average price of a British home increased 1.3% in July to €188,684 or £132,079, after rising 0.6% in June, HBOS, the nation’s biggest mortgage lender, said this week. A shortage of housing pushed prices higher, the lender said.

Across England and Wales, the volume of home sales fell 16.3% in the second quarter to 245,632, the Land Registry said yesterday. In the first quarter, sales volume declined by 4.6%.

House-price growth in Greater London slowed to 5.96% in the second quarter, from 12.1% in the first.