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House price growth continues to slow

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The latest Nationwide house price index said yearly growth had fallen back from the 6.8 per cent recorded in January to 5.7 per cent last month.

This was the sixth month in a row that year-on-year house price growth had fallen back. This report said prices had fallen 0.1 per cent month-on-month and the average property was now worth £187,964.

Robert Gardner, Nationwide’s chief economist, said the general outlook for the market remained strong. “The broader economic backdrop has remained supportive of housing market activity,” he said. “Mortgage rates remain close to all-time lows and consumer confidence remains buoyant thanks to a further steady improvement in labour market conditions. Indeed, the unemployment rate has continued to decline and earnings growth has picked up, particularly in inflation-adjusted terms, thanks in part to the sharp decline in energy prices.”

Gardner said activity had shown signs of improvement towards the end of 2014, but it would take a few more months before any trend could be established. “Nevertheless, the pace of housing market activity remains fairly subdued. There was a small increase in the number of mortgages approved for house purchase in December, up 2 per cent from 59,000 in November to 60,300 in December, though it remains too early to determine whether this marks a turning point in activity.”

Nationwide said the proportion of people owning their home fell to its lowest level in more than a decade with 63.3% of properties owned in 2013/14. This is down on the 65.2 per cent recorded the previous year and the all-time high of 70.9 per cent in 2003.

“If we look at the shift in tenure patterns by age over the past decade we see a marked decline in home ownership rates amongst the younger age groups,” Gardner added. “In particular, among 25-34 year olds, traditionally the segment containing most first time buyers, the proportion of households owning their own home fell from 59 per cent to 36 per cent between 2004 and 2014.”

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