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House price growth continues to slow, says Nationwide

The annual pace of house price growth has slowed again, according to the UK's second biggest mortgage lender.

The Nationwide said house price inflation fell to 6.8% in December, down from 7.2% in December.

It said the reasons for the slowdown in housing market activity "remain unclear", as the economic background has continued to improve.

Monthly house prices rose by 0.3% in January, taking the average house price up to £188,446.

This means that average house prices have been at a plateau since June last year.

"Annual house price growth continued to soften at the start of 2015," said Nationwide's chief economist, Robert Gardner.

He said the number of mortgages approved for house purchase had been about 20% below the level prevailing at the start of 2014 and surveyors continued to report subdued levels of new buyer enquiries.

Slow down?

The Nationwide's survey chimes with the latest data from HM Revenue & Customs (HMRC), whose monthly figures for the whole of the UK show that sales eased off in the last few months of last year.

One explanation for the cooling of the property market is that its recent peak in late 2013 and early 2014 was temporarily stimulated by government initiatives such as the Funding for Lending Scheme (FLS) and Help to Buy.

Some of the pent up demand from earlier years, when obtaining a mortgage was very difficult in the aftermath of the 2008 banking crisis, may now have been partly exhausted.

And the renewed increase in prices of the past few years, which has vastly outstripped the growth of earnings, has again pushed homes beyond the grasp of many would-be buyers.

But Mr Gardner was optimistic that sales would soon pick up again.

"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," he said.

"It is encouraging that the number of new homes built in England was up 8% in the year to the third quarter of 2014."

Source:  BBC.co.uk

Sam: 1st Feb 2015 15:59:00

 

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