The latest figures from the Office for National Statistics (ONS) reveal that residential property prices rose by 10.4 per cent to an average of £271,000 in the year to the end of October 2014, down from an annual price increase of 12.1 per cent the previous month, suggesting that house price growth in the UK is continuing to tail off, especially in the capital.
London yet again showed the strongest growth in prices, although the market in the capital is cooling, with annual growth falling in October to 17.2 per cent from 18.8 per cent in September.
But with all the focus on the downward trend in property price growth in recent months, we are in danger of forgetting that a double-digit rise in home values over the past twelve months is “an impressive leap”, according to Peter Rollings (right), CEO of Marsh & Parsons.
He commented: “After the exertions of the summer months, this is simply a period of natural re-calibration, restoring a more sustainable pace of price inflation. Growth is still ticking along in the right direction.”
House price annual inflation in October reached 10.8 per cent in England, 5.7 per cent in Wales, 4.9 per cent in Scotland and 4.9 per cent in Northern Ireland, the ONS said.
Graham Davidson (left), Managing Director of Sequre Property Investment, said that he is not surprised by the slowing rate of house price growth, especially given the growing “political uncertainty” in the run-up to May’s General Election.
He commented: “Whilst seasonality can account for some of this slight decline in growth, it was likely that prices in many places in the UK would have to start to slacken at some point. London and the South East in particular were bound to experience a slump, as the rate of increase simply could not continue.”
Some experts anticipate that the housing market will cool further this year.
Forecasts from the Centre for Economics and Business Research (CEBR) point to a 0.6 per cent drop in average UK house prices in 2015. This is in sharp contrast to 7-8 per cent growth over 2014.
The CEBR said that London would lead the decline this year, with the average price of a home in the capital expected to fall by 3.3 per cent in 2015 – more than any other part of the country.
In fact, for the first time in five years, home price growth in the UK is set to be higher when London is excluded.
“The new stamp-duty system lowers tax payments for 98 per cent of home buyers and will give a slight boost to the market, but not enough to prevent a price drop,” said Nina Skero, CEBR Economist.
“The uncertainty surrounding May’s election, proposed changes to property taxation, and reduced foreign demand are already bringing down house prices,” he added. “Subdued price rises or modest declines also reflect a correction in the housing market after a period of very strong price growth.”