UK house prices grew at the slowest pace in five years in February on squeezed income and uncertainty stemming from Brexit, data from the Lloyds bank subsidiary Halifax and IHS Markit showed Wednesday.
House prices increased 1.8 percent year-on-year in the three months to February, slower than the 2.2 percent rise registered in January.
This was the weakest rate since March 2013. Nonetheless, the pace of growth was faster than the expected 1.6 percent.
Quarter-on-quarter, house prices decreased 0.7 percent, reversing a 0.1 percent increase in the three months to January. This was the first decline since May 2017.
On a monthly basis, house prices rose 0.4 percent, in contrast to January’s 0.5 percent decrease. This was the first increase in three months. Monthly house price inflation came in line with expectations.
The average price in February was GBP 224,353.
Russell Galley, managing director at Halifax, noted that mortgage rates continue to stay low by historical standards despite the rate hike in November.
“While we expect price growth to remain low, the low mortgage rate environment, combined with an ongoing shortage of properties for sale, should continue to support house prices over the coming months,” Galley added.
Data from the Bank of England showed that mortgage approvals hit a 6-month high of 67,478 in January and secured lending grew at a steady pace of 3.3 percent.
With house prices very high relative to incomes and interest rates now starting to rise, house price inflation is likely to stay close to current rates over the remainder of 2018, Hansen Lu, an economist at Capital Economics, said.