UK house price growth continues to slow

House price growth slowed in February for the third consecutive month, official data showed on Wednesday.

According to the Office for National Statistics, average UK house prices increased by 5.5% in the 12 months to February, down on January’s upwardly-revised growth of 6.5%, although it was ahead of consensus, for 5.1% growth.

The average cost of a house is now £288,000, up £16,000 on February 2022 but £5,000 lower than November’s recent peak.

On a non-seasonally adjusted basis, average UK house prices decreased 1%, compared to a 0.6% decline in March. On a seasonally-adjusted basis, they fell 0.3%.

London showed the lowest annual growth, with prices ahead 2.9%, and the west Midlands the highest, with growth of 8.6%.

Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: “The downturn in the housing market was in full swing in February, due to the surge in mortgage costs.

“Timely measures suggest the downturn has continued since February: Nationwide’s measure of house prices, for instance, fell by a further 0.8% month-to-month in March.

“Looking ahead we continue to think that real disposable incomes will start to recover in the second quarter, supported at first by a pick-up in benefit payments and then, in the third quarter, by a sharp fall in energy prices. But affordability will remain a significant barrier to home purchase for many over the coming months, given that mortgage rates probably have reached a temporary floor for now.”

Mortgage rates spiked last autumn in response to Liz Truss’s disastrous’ mini budget, which included billions of unfunded tax cuts but no spending plans or economic forecasts.