Is the UK property market finally cooling? House price growth slows to 3pc
House prices grew just three per cent in the three months to August, down from 3.5 per cent in July, figures published this morning showed – another sign of cooling market conditions.
The figures, by Halifax, showed prices rose 9.7 per cent in the year to August, down from July's 10.2 per cent, and just 0.1 per cent between July and August down from 1.2 per cent the month before – although the monthly figure tends to jump around, meaning it isn't a particularly reliable indicator.
The average UK house price hit a record £186,270. Halifax suggested there were "tentative signs" of an improved balance between demand and supply. "If sustained, [that] would help to dampen the pace of house price growth".
Martin Ellis, Halifax's housing economist, said muted earnings growth and the prospect of an interest rate hike "are likely to curb demand".
There are some signs of an improvement in housing supply, both in terms of more second-hand properties coming onto the market and increased numbers of new homes. These trends, if sustained, should help to improve the balance between supply and demand, contributing to an easing in the pace of house price growth.
Howard Archer, chief economist at IHS Global Insight, said he expects to see house prices rise by "around six per cent" in 2015.
Slowly rising interest rates, more stretched affordability ratios (due to the marked rise in house prices) and tighter mortgage lending as a consequence of the Mortgage Market Review and the Bank of England’s macroprudential measures announced in June are seen having some restraint on the housing market in 2015.