UK house price growth slows, ONS data shows

UK house price growth surprisingly slowed in February, official figures confirmed on Tuesday, easing to a 7.6% annual rate of growth from the 7.9% rise the previous month.

The Office for Nationals Statistics, which calculated the data based on mortgage completions and so lags other unofficial figures, said the average UK house price cost £284,000 in February.

Data from lenders Halifax and the Nationwide have both recently indicated an acceleration in house price inflation in March.

Annual house price inflation was 8.2% in England, 2.8% in Wales, down 0.8% in Scotland and up 2.4% in Northern Ireland.

On a seasonally adjusted basis, average house prices increased by 0.4% between January 2016 and February 2016, slowing from the 0.9% seen a month before and flat number in December.

The monthly bulletin, which was previously issued by the Department for Communities and Local Government (DCLG), said house price increases in England were driven by an annual increase in the South East of 11.4% (down from 11.7% in January), in the East of 10.3% and London's 9.7% (down from 10.8%).

Economist Howard Archer said he expected house prices to rise by around 6% over 2016 amid reasonably healthy buyer interest, supported by largely decent economic fundamentals and the probability that interest rates will not rise this year, alongside a relative shortage of properties.

However, together with stretched house price-to-earnings ratios and tighter checking of prospective mortgage borrowers by lenders, Archer said there could well be an appreciable easing back in buyer interest from the buy-to-let and second house buyers now that the April rise in Stamp Duty has kicked in.

"Increasing domestic economic and political uncertainties could also rein in housing market activity, especially in the run-up to June’s EU referendum," he said.

Jeremy Leaf, a London estate agent and former chairman of the Royal Institution for Chartered Surveyors, said the ONS figures were already reflecting a change in the market post Stamp Duty hike, and he expected it to be identified more clearly in subsequent months’ data.

"Fortunately the market has been underpinned by a healthy number of first-time buyers and second steppers who are keen to take advantage of buying opportunities while competitive mortgage rates hold," Leaf said.