Property prices in the UK have risen by 10% since the market bottom in April 2009 but the rate of growth is slowing, according to the latest reports to be published.
The average price of a house rose 0.6% in January and is now £169,777 compared with £154,490 last April, according to Halifax House Price index. The 10% increase follows a 2% decline between August 2007 and April 2009.
Although it is the seventh montly price increase in a row the rate of growth is slowing with January’s rise more modest than in any of the previous six months. Halifax also expects prices to remain flat in coming months as more properties are coming onto the market and it has been a lack of supply that has been driving prices upwards.
‘There are some signs that more people are putting their homes on the market. Further increase in the supply of property is possible over the coming months, which would help to curb upward pressure on prices,’ said Halifax economist Martin Ellis.
The Bank of England’s decision yesterday to put its quantitative easing programme on hold and keep interest rates at the historic low of 0.5% means rates are likely to remain low until the second half of 2010.
‘The marked reduction in interest rates over the past 15 months has, from a low base, boosted housing demand from those with a sufficient deposit to enter the market,’ said Ellis.
Earlier this week the latest report from property intelligence group Hometrack gave a similar picture. It said that property prices in the UK are slowing and the general health of the market is overstated.
According to Hometrack prices increased 0.1% in January and the average time a property took to sell also increased for the first time in a year, rising to 8.6 weeks, compared with 8.3 weeks in December.
The index also shows a fall in both the number of new buyers and the number of sellers coming to the market in England and Wales during the month, while there was also a drop in the level of sales agreed.
Others agree that price growth is likely to be muted. ‘We are sceptical that the marked rises in house prices seen since early 2009 can be sustained given a still far from favourable economic environment,’ said Howard Archer at Global Insight.
‘Future developments in unemployment, earnings and interest rates will be key factors to future movements in house prices,’ he added.
The figures contrast with ones reported by Nationwide last week, which showed house prices across the whole UK jumped by 1.2% in January.