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House price growth continues to slow

House price growth continues to slow

Category: Mortgages

Updated: 07/11/2014
First Published: 07/11/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

UK house price growth is continuing its new downward trend, with the latest figures showing that the housing market witnessed slowing annual and quarterly growth, as well as a month-on-month fall, leaving the average house price in the UK to stand at £186,135.

A slower pace

According to the seasonally-adjusted figures in the Halifax House Price Index, house prices in the last three months grew by a marginal 0.8% on the preceding three-month period - the smallest quarterly rise seen since December 2012. This is a significant fall from the 2.7% growth rate seen in September and marks the third consecutive month that house prices have seen a quarterly decline.

Annual house prices also registered a slowing pace with growth of 8.8% in the three months to October, which is a considerable drop from the 9.6% recorded in September. House prices have been steadily slowing since the middle of summer, after a peak of 10.2% was reached in July.

While annual and quarterly figures have shown a slowdown in the pace of house price growth, month-on-month figures are recording a fall. Monthly house prices dropped 0.4% from September to October, which marks the fifth monthly decline in the last year.

Approvals and sales dampen

Approvals and house sales also appear to be matching their strides to the new leisurely pace of house prices, with both areas witnessing notable falls.

House sales have contracted for the seventh month in a row and are now at their lowest level since October 2013. Sales stood at 97,450 in September, which is a marked drop from the peak seen in February, where total sales stood at 109,530.

Mortgage approvals haven't fared much better, with approvals now at a 14-month low. Approvals have fallen for the last three months, and now stand at 61,300. This is a dramatic 20% drop from the 76,500 approvals recorded in January of this year.

A return to equilibrium?

These results suggest that lenders and buyers have taken their feet off the pedal, which is allowing supply and demand in the housing market to rebalance and realign.

"The associated weakening in demand has brought supply and demand into better balance," stated Martin Ellis, housing economist at Halifax. "The economy is, however, continuing to grow at a healthy pace and employment is still rising. These factors should support housing demand over the coming months."

However, the uncertainties surrounding the timing and size of a base rate increase could still play an inhibiting part in the market. As Martin Ellis points out, these issues could make potential buyers question the affordability of getting on or moving up the housing ladder. "While the chances of an imminent interest rate hike may have receded… many borrowers are concerned about the impact a rise could have on their monthly mortgage repayments over the next 12 months," he commented. "This concern is likely to curb buying intentions."

Getting on the ladder

However, if you're in a position to buy that dream home, now may be the perfect time to secure that sale. Many lenders are currently expanding their fixed rate mortgage offerings and are cutting rates, so you could fix yourself to a great deal that will help you to avoid the uncertainties surrounding the eventual base rate rise.

To help you scout out the market and find the best deal for you, take a look at our fixed rate mortgage best buy tables. You can compare the best offers in the market and select the one that would enable you snatch up that perfect home you have your eye on.

What next?

Check out our top fixed rate mortgage deals

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