Annual house price growth in the UK has slowed to 6.8 per cent this month as the industry begins to level out
According to the Land Registry, during the twelve month period ending in December 2014 house prices in England and Wales increased by seven per cent. This was a drop from the 7.2 per cent increase recorded in November and the fourth consecutive month during which the annual rate fell.
A new survey by Nationwide concluded similar findings and, despite an increase of 0.3 per cent in January, claimed the annual rate of UK property price growth slowed to 6.8 per cent.
Average house prices in the country were £188,446 in January according to Nationwide and £177,766 in December according to the Land Registry.
In each case, average house prices have hit a plateau since summer 2014 with the building society saying the causes behind this cooling market activity are unclear.
Forecasts for the future
Henry Pryor, a property commentator, predicted that this slowdown will last at least until after the General Election in May.
“The heat is clearly coming out of the market but it is too early to tell what effect the stamp duty changes announced in the Autumn Statement may have.”
Both pieces of research are in line with the recent data released by HM Revenue & Customs (HMRC), whose monthly figures for the UK show that sales eased off in the final few months of last year.
One explanation for this cooling is that the recent peak seen in late 2013 and early 2014 occurred when government initiatives such as the Funding for Lending Scheme (FLS) and Help to Buy provided a short term boost.
Pent up demand from previous years may also now be slightly exhausted but Nationwide's Chief Economist Robert Gardner is optimistic that sales will soon pick up again.
“It is encouraging that the number of new homes built in England was up 8% in the year to the third quarter of 2014,” he said.
However, while the number of new homes may be on the rise the number of mortgages taken by new buyers is not picking up at the same level.
Less people buying their own homes means greater tenant demand and provides plenty of opportunity for landlords to expand their portfolios and make the most of levelling house prices.