Growth of house prices begins to slow down

Wed, 13 Jul 2016

Uncertainty over the effects of Brexit has led to buyers losing confidence and the growth of house prices slowing, figures from Halifax indicate.

In May, the rate of annual house price growth in the UK was 9.2 per cent, but this fell to 8.4 per cent in June, the lowest level since July last year. However, it doesn't fully reflect the impact of the decision to leave the EU, as information for only six days after the vote were included in the figures, which was not enough time to indicate what the future holds for house prices.

The average house price in June was £216,823, a rise on the £214,115 recorded for May and also up from June 2015, which saw an average UK house price of £199,447.

"House prices continue to increase, albeit at a slower rate, but this precedes the EU referendum result, therefore it is far too early to determine any impact since," said Martin Ellis, Halifax's housing economist.

Howard Archer of IHS Global Insight predicts that house prices could fall by 5 per cent in the second half of this year, and "there could be another 5 to 7 per cent drop in 2017."

Hansen Lu, at Capital Economics, said: "We think economic growth will be tepid in the remainder of the year, we don't expect a recession or sharp rise in unemployment.

"Consequently, we don't expect a large rise in the number of forced sellers - suggesting that house price growth will slow sharply, but won't turn negative."

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