Buying slows as house prices fall in October
THE HOUSING market is slowing down as high prices and strict mortgage regulations put off buyers. The average house price fell by 0.4 per cent in October, according to figures released yesterday by Halifax.
Monthly data can be volatile, but growth in the three months to October also slowed to 0.8 per cent – the slowest three-month rate of growth since 2012.
“The question is whether this is a long-term trend or simply a combination of the traditional seasonal slowdown and the market taking a short breather,” said Jonathan Hopper, managing director of Garrington Property Finders.
“If it’s the latter, we should see the market start to pick up in the New Year.”
House prices have been booming especially over the summer when annual price growth peaked at 10.2 per cent. Market analysts have pointed to several reasons for a subsequent slowdown, however. One is stricter lending rules that came into force in April, which were introduced to prevent reckless mortgage lending. Another reason is decreasing affordability as house prices rapidly outpace earnings.
“Mortgage approvals continuing to fall is a worry, but lenders are offering some great deals at the moment so this is likely to be as much to do with tougher lending conditions than buyers running for the hills,” Hopper said.
Over the past 18 months or so house prices soared as the UK economy emerged from recession.
However, data from numerous sources, including the Royal Institution of Chartered Surveyors, Nationwide and the Land Registry have all pointed towards a recent slowdown in the market.