House price growth slows to 15-month low

31 July 2014

The average house price in the UK grew by 0.1% in July to £188,949 - the slowest rate of growth since April 2013 and evidence of a possible cooling of the housing market.

Annually, the rise was 10.6%, which was down from 11.8% in the 12 months to June 2014 and the slowest rate of growth since March, according to the figures from Nationwide.

Robert Gardner, chief economist at Nationwide, said: "The slowdown was not entirely unexpected, given mounting evidence of a moderation in activity in recent months. Mortgage approvals declined by almost 20% between January and May, and there has also been some softening in forward-looking indicators, such as new-buyer enquiries."

He added that the introduction of tougher mortgage affordability rules at the end of March have partly contributed to the slowdown. However, he added that "the modest rebound in mortgage approvals in June adds weight to the notion that the slowdown will prove temporary".

He pointed to unemployment being at a six-year low of 2.12 million, the expectation for mortgage rates to remain low and rising consumer confidence as reasons to believe housing market activity "is likely to recover in the months ahead".

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Certain markets

Hugo Thistlethwayte, managing director of buying agency Prime Purchase, said the Nationwide index is not indicative of what is happening across the UK as it "probably only applies to about 10% of the UK property market because of the limited use of an average house price figure.

"This slowdown doesn't apply to certain markets. Cambridge and Oxford are booming and there are no signs of the property markets slowing there. In areas such as West London, the housing market may be more muted than it has been but we are still seeing price rises on top of price rises. The market is as near equilibrium now as it can be."

He added: "It remains the case that those who are lucky enough to be buying with equity have the best choice in the marketplace. The new mortgage rules will hamper those who need to borrow money and practically make them second-class citizens as far as vendors are concerned. If you need a mortgage you will be constrained by what you can pay and the length of time it will take."

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