Published: Wed, February 08, 2017
Economy | By Melissa Porter

UK House Prices Start Year on Negative Note as Demand Wanes

UK House Prices Start Year on Negative Note as Demand Wanes

Prices fell by 0.9% in January compared with the previous month, lender Halifax said, a significantly weaker reading than the 1.6% monthly growth seen in December.

Monthly changes can be volatile but annual house price inflation fell to 5.7 per cent in January from 10 per cent in March past year.

"Housing market activity and prices are also likely to be pressurized by stretched house prices to earnings ratios and tighter checking of prospective mortgage borrowers by lenders".

Martin Ellis, Halifax's housing economist, said house prices were still being underpinned by the shortage of properties on the market, low levels of housebuilding and ultra-low interest rates.

"These factors are unlikely to change materially during 2017".

Annual house price growth cooled to 5.7 per cent, down from 6.5 per cent in December and again weaker than the Reuters poll forecast.

EMoov chief executive Russell Quirk says the nation should avoid scaremongering interpretations of the drop.

This was lower than December's 6.5 per cent but followed two consecutive increases in the annual rate from a low of 5.2 per cent in October 2016. "While there will be growth in prices this year, measures in the government's housing white paper announced today will tackle the gridlock in supply and will ultimately determine the scale of price growth".

The average price for a first home in the United Kingdom crossed the £200,000-mark for the first time, while prospective home owners had to raise more than £32,000 for a deposit.

But on the front line, it is far from a seller's market, with astute buyers able to ask for and win big discounts.

'The result is greater levels of month on month volatility and a sense of caution returning to the market, as rising consumer inflation threatens to drive up the cost of living faster than average wage rises.

A shortage of properties for sale and low levels of house building have sent prices sky high, making it more hard for first time buyers to get on the ladder.

But while mortgage rates remain low, and the labour market strong, buyers aren't going to disappear into the ether.

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