Following last year’s boom, house price inflation is starting to slow according to the latest figures from the Halifax. In February, house prices fell by 0.9% bringing the standardised average property price to £84,499.
Commenting on the figures Martin Ellis, group economist for the Halifax said: “This may be an early indication that the market is beginning to slow down.”
Annual house price inflation has fallen from 16% in January to 15% in February. Despite the small dip, the Halifax is confident that with good economic conditions, growth will still be strong, but not as buoyant as last year.
Ellis said: “Annual house price inflation is expected to fall to 12% by the end of the year on the back of interest rate rises and the abolition of Miras. This could add £700 to mortgage payments each year on a £60,000 loan.”
However, the rate of slowdown is not likely to be uniform.
Ellis said: “Growth in London will certainly ease off. The growth of 29% in 1999 will slow over the year to 19%. Regions outside the South will continue to be stronger this year as the economy was held back by a weakness in manufacturing.”
As a result, Ellis suggests the UK could witness a levelling out of house price inflation and so the North-South divide may not be as prominent as last year.
Research from the Royal Institute of Chartered Surveyors also found that the market is beginning to slow, but has called for a stall in interest rate hikes.
Ian Perry, housing market spokesman at RICS, said: “The Bank of England should hold rates steady for a while to assess the impact of a 1% cumulative increase before acting again.”