Annual property price inflation sees weakest February growth for four years

House prices last month were 3.8 per cent higher than a year prior, representing the weakest annual growth for four years.

The latest annual increase is the lowest since a 2.6 per cent rise in May 2013, according to the latest monthly index from Halifax.

In February, annual growth was a higher 5.1 per cent and one of Britain’s biggest lenders reports that values were flat between February and March.

It means the average property price across Britain now stands at £219,755. In March 2016 they stood at £213,838.

Martin Ellis, Halifax housing economist, said: ‘The annual rate of house price growth has more than halved over the past 12 months. A lengthy period of rapid house price growth has made it increasingly difficult for many to purchase a home as income growth has failed to keep up, which appears to have curbed housing demand. Nonetheless, the supply of both new homes and existing properties available for sale remains low. This, together with historically very low mortgage rates, is likely to support house price levels over the coming months.’

Simon Gerrard, past president of the NAEA propertymark and MD of Martyn Gerrard, says:

‘These statistics are no surprise. There is widespread caution about the future of our economy following the triggering of Article 50, which in turn seeps into the housing market. The bottom line is that demand for housing still outstrips supply. This makes for a relatively stable market, so for those looking to move, now is a good time to take advantage of the status quo. Why hang about? Supply is unlikely to increase dramatically in the near future, so prices will remain steady with a gradual increase and there is less risk involved.’

According to a separate Halifax report,  average house prices have increased by more than total average employees’ net earnings in a third of local authority districts across the UK in the past two years.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: ‘House prices are being increasingly constrained by households’ incomes, now that mortgage rates have hit a floor and regulations are preventing a further upward shift in average loan-to-income ratios.’

An extended period of rapid house price growth has made it increasingly difficult for many to purchase a home as income growth has failed to keep up, which appears to have curbed housing demand.

The biggest gap between rising property values and earnings was in Haringey, London.

House prices in the leafy borough increased by an average of £139,803 over the last two years, above average take-home earnings in the area of £48,353 over the same period – a difference of £91,450, equivalent to £3,810 per month.

The supply of both new homes and existing properties available for sale remains low as data from the Royal Institution of Chartered Surveyors’ monthly report found the number of properties coming on to the market fell again in February.

This was the 12th successive monthly decline, keeping average stock levels on estate agents’ books close to historic lows.

This, together with historically very low mortgage rates, is likely to support house price levels over the coming months.

It is increasingly difficult for Britons to get on the property ladder as Bank of England research found that approvals have been in a narrow range between 67,000 and 70,000 per month over the past five months, highlighting that home sales are unlikely to change significantly over the next few months.

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, said: ‘What we have found on the ground is that there is more of a general acceptance that prices are flattening and if people want to move, then Easter is the time to get on with it and be more realistic about making and accepting offers.’

However, good news for borrowers as mortgage rates remain low.

Mark Harris, chief executive of mortgage broker SPF Private Clients, explained: ‘Mortgage rates continue to stay low and competitive, which is helping support property prices to an extent. ‘

Despite Brexit anxiety, The Centre for Economics and Business Research commented this week that it expects house prices to keep pushing upwards in the coming years. It said a continued lack of homes for buyers to choose from will help to underpin prices.

Cebr expects the average UK property value to increase by around £52,000 by 2021.

For financial advice or a free market appraisal call Bowson Estates on 0191 2128100.