Annual house price growth has now slowed for the fifth month in a row, currently standing at 2.4% above their pre-crisis peak.
UK house prices rose by 0.3% in January, slightly higher than December's rise of 0.2%.
The latest House Price Index from Halifax revealed that while house prices in Q4 were 0.3% higher than Q3, the rate of increase declined for the fifth consecutive month and was the lowest since November 2012 (-0.3%).
Halfiax stated that they expect a further moderation in house price growth over the coming year. House prices nationally are predicted to increase in a range of 3-5% in 2015.
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:
“The further moderation in the pace of price growth is unsurprising, given the slowdown in housing market activity in recent months. The number of mortgages approved for house purchase has been around 20% below the level prevailing at the start of 2014 and surveyors continue to report subdued levels of new buyer enquiries.
“The reasons for the slowdown in activity remain unclear. Unemployment has continued to decline and wage growth has started to outstrip increases in the cost of living for the first time since the financial crisis. Surveys suggest that consumer confidence remains elevated – a view corroborated by healthy gains in retail sales over recent months.
“Although house price growth continues to outpace income growth by a significant margin, affordability does not appear stretched at a national level. The cost of servicing a typical mortgage remains close to the long run average as a share of take home pay, in part thanks to the ultra-low level of mortgage rates.
“Supply side developments are crucial in determining the pace of price growth. Surveyors continue to report a dearth of new homes coming on to the market, which may help to explain why house price growth has remained fairly robust, despite a more noticeable decline in housing demand since the summer.
“If the economic backdrop continues to improve as we and most forecasters expect, activity in the housing market is likely to regain momentum in the months ahead. It is encouraging that the number of new homes built in England was up 8% in the year to Q3 2014. However, this is still 34% below pre-crisis levels and little over half the expected rate of household formation in the years ahead.”
Rob Weaver, director of investments at property crowdfunding platform, Property Partner, says:
"The housing market rose slightly in January but the broader trend is one of slowdown.
"While it’s a far cry from the frenzied double-digit growth seen in the first quarter of last year, a period of gentler growth is welcome. The property market is much less volatile than a year ago and feels more sustainable.
"It was only fairly recently that every region saw growth in house prices for the first time. It is a positive to see more balance in the market, rather than runaway prices purely across London and the southeast.
"Our outlook for the year remains positive. While some agents predict no growth we can’t believe this will be the case. There is a general feel good factor, driven by higher employment, continued low interest rates and falling inflation, which is lowering the cost of living. This is filtering through to the housing market where borrowers continue to take advantage of cheap mortgage rates.
"The slowdown we are seeing is largely psychological. People began to feel that prices were getting out of control in many areas and became cautious. We should be welcoming this trend, not decrying it.
"Longer term, property remains a good, solid investment for most people. It is important to get on a rung of the ladder as history teaches us that there are periods when growth races away. When this happens, you want to be invested in property, not left on the sidelines."
Ed Goodworth, real estate partner at BDO, said:
“While the fifth month of slow house price growth is encouraging for those trying to get on the housing ladder, we’re unlikely to see a full scale correction at this stage. There is not enough development activity taking place to meet demand, and so it can only be a matter of time before the pressure on the housing market causes prices to rise again.
"The government can help housebuilders by introducing a minimum mandatory response time to the planning system or encouraging local authorities to work with developers by providing a bespoke housing plan for their areas. With the general election looming, hopefully the parties will use the opportunity to support builders and address the shortfall in UK housing.”
