U.K. house prices grew at the slowest pace in one year in December, but housing market activity is expected to gain momentum in the coming months given the improved economic backdrop, survey figures from the Nationwide Building Society showed Tuesday.
The annual house price inflation eased to 7.2 percent in December from 8.5 percent in the previous month. This matched economists' expectations. House price inflation accelerated for a fourth straight month.
The latest annual increase was the slowest since November 2013, when house prices rose 6.5 percent.
The house price index rose a seasonally adjusted 0.2 percent month-over-month in December, slower than November's 0.3 percent increase. This was in line with the consensus estimate and marked the third consecutive month of increase.
Quarter-on-quarter, house prices rose 1 percent in the three months to December, slightly faster than the 0.9 percent climb in the three months to November.
For the full year 2014, house prices grew at a slower rate of 7.2 percent in 2014 compared with the 8.4 percent climb in 2013.
Though price growth in London eased, the capital recorded the fastest rise in prices among the regions, rising 17.8 percent in the fourth quarter. Twelve out of the thirteen regions in the U.K. logged slower annual rise in house prices.
«The slowdown in housing market activity is surprising given further steady gains in employment, a pickup in wage growth (albeit from low levels) and the continued low level of mortgage rates,» Nationwide Chief Economist Robert Gardner said.
«Moreover, surveys suggest consumers remain in high spirits -a view reinforced by robust retail spending growth in November, which was at its highest for over a decade.»
The economist hoped that the pick up in the construction sector will set the stage for house price growth converging with income growth in the upcoming quarter.
«Recent changes to stamp duty may also have a modest positive effect on demand, especially in the South of England and Scotland,» Gardner added.
Elsewhere today, U.K. Land Registry reported that England and Wales house prices dropped 0.1 percent in November from October, when prices fell 0.3 percent. In September, prices had declined for the first time, by 0.1 percent , after five successive months of rise.
On a yearly basis, house prices advanced 7.1 percent after rising 7.3 percent in October. The average house prices in England and Wales totaled GBP 176,581.
In London, house prices rose 1.2 percent month-over-month in November after remaining unchanged in October. Annually, prices in London grew the most among the regions, by 17.4 percent.
IHS Global Insight economist Howard Archer said house prices were currently being reined in by an appreciable moderation in housing market activity from the peak levels seen at the start of 2014.
«While the recent Stamp Duty reform should have a beneficial impact on the housing market (it is estimated that 98% of buyers will now pay less stamp duty), we doubt it will cause housing activity and prices to see a major turnaround,» he said.
«There is also the possibility that the markedly increased likelihood that the Bank of England will not lift interest rates before late-2015 will provide some limited near-term impetus to housing market activity.»
The material has been provided by InstaForex Company – www.instaforex.com