House price inflation is continuing to slow, according to the latest results from two leading surveys.
Land Registry has stated prices in England and Wales in the year to December 2014 rose only 7%, down from 7.2% in November and the fourth month in a row that the annual rate has fallen.
The Nationwide building society’s latest survey shows a similar pattern.
Although it found house prices in the UK rose by 0.3% in January 2015, the annual rate of growth slowed to 6.8%.
The Nationwide building society said the average house price was £188,446 in January 2015, while the Land Registry discovered the average house price in England and Wales to be £177,766 in December.
Both sets of figures reveal that average house prices have had little increase since last summer.
The Nationwide said reasons for the slowdown in UK’s housing market activity since then “remain unclear”, as the economic background has in fact continued to improve.
“Annual house price growth continued to soften at the start of 2015,” said Robert Gardner, Nationwide’s chief economist.
He said the number of mortgages approved for purchasing house had been about 20% below the level prevailing at the start of 2014 and surveyors continued to report subdued levels of new buyer enquiries.
Property commentator Henry Pryor said he expected the present slowdown to hang till at least until after the forthcoming general election.
“The heat is clearly coming out of the market but it is too early to tell what effect the stamp duty changes announced in the Autumn Statement may have,” he said.
Both surveys suggest with the recent data from HM Revenue & Customs (HMRC), whose monthly figures for the whole of the UK state that sales eased off in the final few months of last year.
One explanation for the cooling of the housing market is that its recent peak in late 2013 and early 2014 was stimulated by government schemes such as the Funding for Lending Scheme (FLS) and Help to Buy.
Some of the pent up demand from earlier years, when obtaining a mortgage was very difficult in the aftermath of the 2008 banking crisis, may now have been partly exhausted.
And the increase in prices of the past few years, which has greatly outstripped the growth of earnings, has again pushed homes beyond the reach of many would-be first time buyers.
But Mr Gardner was optimistic that sales would soon pick up again.
“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,” he said.
“It is encouraging that the number of new homes built in England was up 8% in the year to the third quarter of 2014.”