UK house prices made some modest growth in February, but the general outlook is towards a a slowing housing market, according to the latest data from the FT/Acadametrics House Price Index.
The FT Index reported a 0.5% rise in house prices, with year-on-year inflation totalling 6.1%, down from an annualised rate of 6.8% in January.
The FT said that the rise in house prices in February is slightly stronger than the 0.2% rise reported in January. However, the three months through January were the lowest monthly growth rates seen in over three years.
Dr Peter Williams, Chairman of Acadametrics, comments, “House prices in England and Wales increased by just 0.5% in February, which follows three consecutive months of monthly growth either just above or just below zero – the lowest for over three years. On an annual basis, house prices rose by 6.1%, the lowest level since June 2006 and the sixth month in succession that this rate has been falling.
An annual increase of 6.1% is still substantial (4.7% without London) but it is moving in the direction of longer run market averages. The FT index is based on all property transactions in England and Wales and thus gives a very accurate view of the totality of that market. It shows on an annual basis that the market has been trending downwards and this view is backed by almost all the other market reporting.
There is nothing to suggest that this downward trend won’t continue despite our marginally higher monthly figure, even though the fundamentals of demand and supply, employment and interest rates remain very favourable. The fact that London, as a key driver of the market, has now recorded the fifth monthly fall in its annual rate of price inflation is not without its significance and that is matched in the South East and the South West.
The latest GfK NOP index and Nationwide BS consumer confidence survey for February both show a further weakening in confidence, and we are now seeing a clear feed through from the problems in the funding markets in terms of the increased price and reduced availability of a wide range of mortgage products. Without doubt, 2008 will be a challenging year for all those involved with the housing market and not least for buyers and sellers.”