House prices are rising at their slowest pace in more than four years, according to Britain’s biggest mortgage lender, as the property market undergoes a downturn in sales and activity.
Prices rose by an average of 2.1 per cent across the UK in the three months to July compared with a year earlier, Halifax said.
This is the slowest pace since April 2013 and significantly down from a peak of 10 per cent in March last year.
“The speed of price growth has slowed substantially,” Jonathan Hopper, managing director at the buying agent Garrington Property Finders, said. “What growth there is is listless, with prices being propped up by record low levels of supply.”
Halifax said that house prices also fell 0.2 per cent between May and July compared with the previous three months. This is the fourth successive quarterly fall and the first time this has happened since November 2012.
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The figures from Halifax add to signs that the housing market is stuttering.
Mortgage approvals fell to a nine-month low in July, while sales fell to their lowest level in eight months. Estate agents have reported that the number of homes available on their books is at an all-time low, while inquiries from buyers have stagnated since November.
Part of the reason for the slowdown in the housing market appears to be increased economic uncertainty in the face of Brexit negotiations with an unpredictable outcome.
Consumer confidence has fallen to its lowest level since the immediate aftermath of the Brexit vote in June last year, according to a survey by GfK, a market research firm, which recorded a drop in people who said that they were willing to engage in “major transactions”.
Households’ spending power is also being squeezed. Wages have been rising more slowly than inflation, but there are signs that the booming jobs market may lead to pay growth picking up in the medium term.
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On the more volatile monthly measure, Halifax said that prices rose 0.4 per cent between June and July, partly offsetting the 0.9 per cent decline recorded between May and June.
Russell Galley, managing director of Halifax Community Bank, said that a “continued low mortgage rate environment, combined with an ongoing shortage of properties for sale, should help continue to support house prices over the coming months”.
Separate research by Lloyds Bank, the owner of Halifax, also shows that homeowners are, on average, richer than ever.
Household wealth, which includes the value of houses and financial assets such as shares and stocks, rose to £10.05 trillion at the end of last year.
In the past decade the average British household has increased its wealth by £143,000, Lloyds said. The rate of growth in household wealth since 2006 has outpaced inflation by 33 per cent.
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The proportion of this wealth that is accounted for by housing, rather than financial assets, has edged up to 42 per cent, due to Britain’s house price boom over the past decade, with prices 51 per cent higher than in 2006.
Lloyds said there had been a £1.7 trillion rise in the value of the national private housing stock, from £2.6 trillion in 2006 to £4.4 trillion in 2016.
