Weakened demand slows house price growth

House prices in the last three months of 2014 (October-December) were 0.3% higher than in the previous three months (July-September 2014) according to Halifax as weakening demand slowed growth.

This quarterly rate of increase declined for the fifth consecutive month and was the lowest since November 2012 (-0.3%).Prices in the three months to December were 7.8% higher than in the same three months a year earlier. On this measure, annual house price growth has fallen from a peak of 10.2% in July and is now at its lowest rate since January 2014 (7.3%).

House prices grew by 0.9% between November and December.

Commenting, Martin Ellis, housing economist, said:

“House prices in the final three months of 2014 were 0.3% higher than in the preceding three months. The quarterly rate of increase has now fallen for five successive months. Annual price growth also eased further, to 7.8% in December. This compares with a peak of 10.2% in July.

“The deterioration in housing affordability as a result of rising house prices, earnings growth that has been consistently below consumer price inflation until very recently and speculation of an interest rate rise, have combined to temper housing demand since the summer. The weakening in housing demand has led to a reduction in both price growth and sales in recent months.

“We expect a further moderation in house price growth over the coming year with prices nationally predicted to increase in a range of 3 to 5% in 2015. Housing demand, however, should continue to be supported by a growing economy, rising employment levels, still low mortgage rates and the first gain in ‘real’ earnings for several years.”

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