House price growth slows in February

House price growth slows in February
House prices are growing at their slowest rate for five years, according to Halifax’s latest monthly House Price Index.

The bank said that the annual rate of house price growth slowed to 1.8% in February, down from 2.2% in January, the lowest rate of growth since March 2013. Although there are signs of improved wage growth, living costs continue to rise at a faster rate and will have contributed to the slowdown, with many households feeling the pinch.

However, on a monthly basis, house prices rose by 0.4% in February, following two consecutive monthly falls. The average house price last month was £224,353.

Sales figures remain strong, Halifax said, exceeding 100,000 for the thirteenth month in a row.

Nationwide also reports house price dip

Nationwide Building Society’s February House Price Index also showed slowing house price growth. It said that house prices grew at an annual rate of 2.2% last month after a 3.2% year-on-year rise in January.

On a monthly basis, Nationwide said that house prices fell by 0.3% in February, compared to a 0.8% increase in January. According to the building society, the average house price in the UK stood at £210,402 in February, down from £211,756 in January and up from £205,846 in February last year.

Mortgage approvals fell to their weakest level for three years in December, Nationwide said, at just 61,000. However, Halifax reported that mortgage approvals rose sharply in January, rising by 9.4% month on month to 67,478, although they were still 2.4% lower than in the same month last year.

Reasons to be cheerful

Although house price growth is slowing, both Halifax and Nationwide said that property prices should continue to be supported by limited supply and low mortgage rates.

Russell Galley, managing director at Halifax said: “Despite the November rise in the Bank of England Base Rate, mortgage rates continue to stay low by historical standards. While we expect price growth to remain low, the low mortgage rate environment, combined with an ongoing shortage of properties for sale, should continue to support house prices over the coming months.”

Whilst there are still plenty of competitive mortgage deals available, several lenders have raised rates in recent weeks in anticipation of a rate rise later this year, so don’t hang around if you’ve spotted a deal you like.

Remember that if you’re tied into your existing deal, you can still secure a new mortgage months in advance so that it begins when your current deal ends. Seek professional help if you’re not sure which is the best mortgage deal based on your individual circumstances.

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