House price growth slows in August

House prices have risen by 6.9% over the past twelve months but have slowed in growth in August according to the latest Halifax House Price Index.

Prices in the three months to August were 6.9% higher than in the same three months of last year.

This was down from July’s figures of 8.4% in July, continuing the downward trend since March when the annual rate reached 10.0%.

This month’s figure of 6.9% is the lowest yearly growth rate since October 2013.

There was a slowdown in growth as prices only saw a 0.7% in the three months to the end of August in comparison to previous quarter.

According to the Halifax, the average cost of a house in August was £213,930 up from 205,593 in August 2015.

Sales of homes fell marginally in July by 1%. The Halifax said the number of sales had become “heavily distorted” in recent months following the introduction of higher stamp duty tax rates for buy to let and second home purchases in April.

Mortgage approvals also dropped for the second consecutive month – again affected by the change in stamp duty – fell by 5% between June and July.

New instructions by people selling their homes dropped for the fifth successive month in July. This played a part in the lack of homes available to buy, which is hovering close to record low levels.

Martin Ellis, Halifax Housing Economist, said: “House prices in the three months to August were 0.7% higher than in the previous quarter; down from 1.5% in July. The annual rate of growth fell from 8.4% in July to 6.9%.

“House price growth continued the trend of the past few months in August with a further moderation in both the annual and quarterly rates of increase. There are also signs of a softening in sales activity.

“The slowdown in the rate of house price growth is consistent with the forecast that we made at the end of 2015. Increasing difficulties in purchasing a home as house prices continued to increase more quickly than earnings were expected to constrain demand, curbing house price growth.”

 

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