UK house prices growth slows and may slow further, Halifax says

UK house price growth slowed month on month but over the last three months returned to annual growth after a period of softening post the Brexit vote, according to a survey by Halifax.

The lender reported that British house prices rose a modest 0.2% month-on-month in November to £218,002, following a 1.5% increase in October.

In the three months to November prices were 6.0% higher than in the same period in 2015, having slowed to a three year low of 5.2% in the three months to October.

Prices were also 0.8% higher than in the preceding quarter of 2016.

Halifax's housing economist, Martin Ellis, pointed out that despite November’s pick-up, the annual rate has been on a steady downward trend in recent months since reaching a peak of 10.0% in March.

"Heightened affordability pressures, resulting from a sustained period of house price growth in excess of earnings rises, appear to have dampened housing demand, contributing to the slowdown in house price inflation.

"Very low mortgage rates and an ongoing, and acute, shortage of properties available for sale should help support price levels although annual house price growth may slow over the coming months.”

Economist Howard Archer at IHS Markit noted that this added to recent data and surveys that suggested housing market activity has recently come off its lows after softening appreciably between March and August.

"With housing market activity coming off its recent lows and the economy currently resilient, house prices look likely to rise modestly in the near term.

"However, we suspect that house prices will come under increasing pressure as 2017 progresses and may edge down over the year, possibly by around 2%. We believe the fundamentals for house buyers will progressively deteriorate during 2017 with consumers’ purchasing power weakening markedly and the labour market likely softening."

Russell Quirk of online estate agency eMoov.co.uk argued gloomy predictions on a dwindling level of demand in the market were wrong.

"The driving factor behind inflating house prices is an imbalance between supply and demand and, with house prices spiking this late in the year, it would seem there is certainly a sustained level of buyer demand present in the current market.”