UK house prices bounced back slightly in February after two months of monthly falls, although annual growth was the slowest in nearly five years, new figures show.
The price of the average UK home rose by £891, or 0.4 per cent, between January and February to £224,353, down slightly from November’s high of £226,408, according to mortgage provider Halifax.
The small monthly increase comes after decline of 0.5 per cent and 0.8 per cent in January and December respectively.
Housing slowdown: Halifax said it continues to expect price growth to remain low
But the annual rate of growth slowed from 2.2 per cent in January to 1.8 per cent in February, the slowest annual increase since March 2013, when prices rose by 1.1 per cent.
Halifax’s February figures are more upbeat than those by Nationwide, which said prices fell by 0.3 per cent, or £1,354, between January and February.
Nationwide also signalled a slowdown in annual house price inflation, although it estimated a figure of 2.2 per cent.
Halifax recorded a price fall only on a quarterly basis, noting that house prices between December and February were 0.7 per cent lower than in the preceding three months, the first decline since May last year.
Russell Galley, managing director at Halifax, said the figures indicated house prices continued to remain broadly flat as they have since the end of the year.
He added: ‘The labour market continues to perform strongly […] However, earnings are rising at a slower rate than consumer prices.
‘Despite the November rise in the Bank of England Base Rate, mortgage rates continue to stay low by historical standards. While we expect price growth to remain low, the low mortgage rate environment, combined with an ongoing shortage of properties for sale, should continue to support house prices over the coming months.’
Brian Murphy, head of lending for the Mortgage Advice Bureau said the Halifax report indicated that house price growth was still evident, albeit at a modest level.
‘Having said that, the Halifax, along with other leading indices, had suggested previously that 2018 would be a “flat” year for both the number of transactions and property values, therefore to some extent, the market is performing to expectations with no cause for alarm.’
Halifax noted that mortgage approvals – a good indicator of completed house sales – rose sharply in January but also that both supply and demand continued to fall.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: ‘On balance, Halifax doesn’t record much movement one way or another, a small monthly rise in prices and a small annual fall, which bears out what we are seeing on the ground.
‘There are more listings and viewings but a reluctance to make an offer until clear direction of travel for the market can be established, with buyers and sellers still negotiating hard.
‘We don’t expect this pattern to alter very much over the next few months unless there is a Brexit breakthrough.’