House price growth slows as London values fall
Annual house price growth dropped to 4.4% in February, down from 4.7% the month before, the latest house price index from the Office for National Statistics has revealed.
Prices actually fell by 0.1% month-on-month, taking the average house price to £225,047.
There were significant regional variations according to the data. The west Midlands saw prices jump 7.3% over the 12 months and the east Midlands enjoyed a rise of 6.3%, while prices in London dropped by 1%.
Jonathan Hopper, managing director of Garrington Property Finders, said though house price growth is currently “insipid” it cannot be dismissed as simply the byproduct of short supply, arguing there is genuine demand for appropriately-priced homes.
He said: “Two crucial factors could nudge the market up or down from here. Firstly the improving economic backdrop – which is putting more money into people’s pockets as wage rises finally outpace inflation – and secondly the prospect of interest rate rises.
“The freeing up of latent demand is far from a blooming in buyer confidence, but with every would-be buyer who decides it’s ‘now or never’, the market will increase its fragile momentum.”
Mike Scott, chief property analyst at estate agent Yopa, noted that prices have largely been flat since last August, and predicted year-on-year growth will continue to slow over the next few months.
He added: “With no sign of a turnaround in the London market, we expect it to continue to be the worst-performing region for the rest of this year while prices carry on increasing in the rest of the country, albeit at a slower rate.”
London fails to benefit from Help To Buy
Lucy Pendleton, founder and director of estate agent James Pendleton, argued that the London market is struggling because it is not benefiting from the “shot in the arm” that the rest of the country is getting via the Help to Buy scheme.
She added: “The market is struggling where Help to Buy gets no traction and doing well, if not very well, where it does. That’s more than a coincidence.”