LONDON (Reuters) – British house price growth slowed on an annual basis for a fifth month in a row in January, further reducing the risk of a bubble in the housing market, figures from mortgage lender Nationwide showed on Thursday.
House prices rose 6.8 per cent from January last year, the slowest increase in 14 months.
The gain was slightly stronger than a forecast for a 6.6 per cent increase in a Reuters poll of economists, but down from an increase of 7.2 per cent in December.
On the month, house prices rose 0.3 per cent in January, in line with expectations and up from 0.2 per cent in December, Nationwide said.
Robert Gardner, chief economist at Nationwide, said the slowdown reflected a 20 per cent fall in mortgage approvals since the start of 2014 and surveyors continued to report subdued levels of new buyer enquiries.
New rules for banks issuing mortgages were introduced last year as the Bank of England and other regulators moved to head off the risk of a bubble in the housing market.
But Gardner said the reasons for the continued slowdown were unclear given the fall in unemployment, wages that have started to rise faster than inflation and high levels of consumer confidence which have helped fuel strong retail sales growth.
“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.
Prices were also likely to be supported by the long-term shortage of new houses coming onto the market.
“It is encouraging that the number of new homes built in England was up 8 per cent in the year to the third quarter of 2014. However, this is still 34 per cent below pre-crisis levels and little over half the expected rate of household formation in the years ahead,” Gardner said.