UK house price growth slows to weakest level in 12 months

Latest figures add to evidence that the market for residential property is cooling

UK house-price growth slowed to its weakest in more than a year in December, adding to evidence that the market for residential property is cooling.

The annual gain in value dropped to 7.2 per cent from 8.5 per cent in November, the lowest rate since November 2013 and the fourth consecutive slowdown, Nationwide Building Society said in a statement on its website today.

Prices rose 0.2 per cent on the month for a third straight increase. The housing market has slowed this year, with home-loan approvals falling to their lowest in 16 months in October, as affordability is stretched and the Bank of England moves to prevent a buildup of unsustainable lending.

Still, Nationwide said the slowdown was "surprising," given gains in employment, a pickup in wage growth and low mortgage rates. "If the economic backdrop continues to improve as we and most forecasters expect, activity in the housing market is likely to regain momentum in the months ahead," Robert Gardner, chief economist at Nationwide, said in the statement.

“Hopefully, this will set the stage for house-price growth gradually converging with income growth in the quarters ahead.”

The average house price stands at £188,559, with growth for the three months to December at 1 percent compared with 0.9 per cent in the quarter through November, Swindon, England-based Nationwide said. The 7.2 per cent gain in values nationally this year compares with 8.4 per cent in 2013. Regional Breakdown Nationwide said house-price inflation moderated in all but one of 13 regions in the fourth quarter from a year earlier.

London, the strongest performing area, posted a gain of 17.8 per cent compared with 21 percent in the previous three months. "While we expect some pick-up in housing-market activity in 2015 from the recent lows, we expect the increase in activity to be limited, thereby keeping a lid on house-price increases," said Howard Archer, an economist at IHS Global Insight in London.

“Many people may also be deterred from buying houses because they look pricey in a number of areas after recent sharp rises.”