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House price gains in the UK are at the slowest rate of growth in more than three years, according to the latest data from lender Halifax, as the sustained rise in the cost of housing has made it difficult for people to buy a home.
House prices in the three months to February were 5.1 per cent higher than in the same period a year ago, down from a 5.7 per cent gain in the three months to January and lower than analysts’ expectations of a 5.3 per cent rise.
That marked the lowest annual rate of growth since July 2013, Halifax said as it released its monthly index on the UK market.
Prices were up 0.1 per cent in February compared to January, ahead of January’s monthly revised 1.1 per cent drop but also softer than an expected 0.4 per cent rise.
The lender warned that house price growth would be curbed this year amid lower consumer spending power and a weaker labour market.
Martin Ellis, Halifax housing economist, said:
Housing demand is being supported by an economy that continues to perform well with employment still expanding. Meanwhile, the supply of both new homes and existing properties available for sale remains low. This combination is pushing up prices.
The annual rate of house price growth has, however, nearly halved over the past 11 months. A sustained period of house price growth in excess of pay rises has made it increasingly difficult for many to purchase a home. This development, together with signs of reduced momentum in the jobs market and squeezed consumer spending power, is expected to curb house price growth during 2017.
Commenting on the figures, Howard Archer, chief UK and European economist at
IHS Markit, said:
February’s slight rise in house prices reported by the Halifax fuels our belief that house price gains over 2017 will be no more than 3% and could well be less. Weakening consumer fundamentals, likely mounting caution over making major spending decisions, and elevated house price to earnings ratios are likely to weigh down on house prices. However, a shortage of supply is likely to put a hard floor under prices.
A similar index earlier this month from Nationwide found that house prices rose 0.6 per cent in February compared to the previous month, ahead of analyst expectations of a 0.2 per cent rise and a stronger growth rate than the 0.2 per cent increase recorded in January.
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