House price growth slows to its lowest rate for 17 months
House prices in the UK fell by 0.1% in February 2015 to £187,964, taking the annual rate of growth to just 5.7% - its lowest for 17 months.
The monthly figures, compiled by Nationwide, follow meagre house price gains of just 0.3% in January and 0.2% in December 2014; while the February drop was the first house price fall in five months.
The annual rate of growth has also been falling since a high of 11.8% in June 2014 - down from 8.5% in November to 7.2% in December and then 6.8% in January.
Robert Gardner, Nationwide's chief economist, said: "This is the sixth month in a row in which annual growth has moderated, [but] the broader economic backdrop has remained supportive of housing market activity."
Market bottoming out
Howard Archer, chief European and UK economist at HIS Global Insight, said he expects the housing market to pick up, underpinned by low mortgage rates, the recent Stamp Duty reform, and increased consumer confidence.
"We suspect that the weakening of housing market activity is now bottoming out and we see it picking up to a limited extent in 2015 from current levels.
"This suspicion is supported by the British Bankers' Association reporting that mortgage approvals for house purchases rose - albeit modestly - for the first time in seven months to 36,394 in January. Consequently, we expect house prices to rise around 5% in 2015."
Gardner said the long-term trend of declining numbers of first-time buyers and falling numbers of young people owning a home could have been factors in the slowdown in housing market activity.
According to a recent English Housing Survey, after rising almost continuously over the course of the twentieth century, the rate of home ownership in England has been declining steadily since 2003.
"The downward trend was maintained in 2013/14, with a further drop in the home ownership rate to 63.3% down from 65.2% the previous year," Gardner explained. "Home ownership is now at its lowest rate for almost thirty years and is eight percentage points below the all-time high of 70.9% in 2003."
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.