Source: The Guardian
The pace of house price growth slowed sharply in the last three months of 2014, according to Nationwide building society, but ended the year 8.3% higher than in 2013.
In more evidence of the rapidly cooling property market, three regions of the UK – the north-west, Yorkshire and Humberside, and Wales – recorded outright price declines in the final quarter of 2014.
Across the UK, average prices edged up 0.2% in December and 1.1% in the quarter, taking the average price to £189,002.
In London, the typical home changed hands for £406,730, up 2.5% on the quarter and up 17.8% over the 12 months. Prices in the capital are now 35% above their former 2007 peak.
Among major towns and cities, St Albans recorded the highest increase in prices, leaping by 24% over the year to an average of £494,777, closely followed by a 19% rise in Reading and a 17% rise in Belfast.
The Northern Ireland capital recorded a dramatic boom and bust in its property market during the Celtic Tiger years but is now showing distinct signs of recovery, albeit from a low base.
However, several major cities in the UK recorded zero or very low house price growth over the year. In Manchester, prices failed to rise over the year, while in Leicester the rise was 3% and in Liverpool it was 5%.
Nationwide’s chief economist, Robert Gardner, said: “All regions except the north of England saw a slowing in annual price growth in the final quarter of 2014. London was the top performing region for the second year running. Yorkshire and Humberside was the weakest performing English region, with prices up 1.5% over the year.
“Annual price growth in Scotland moderated to 4.2%. Northern Ireland saw an 8.1% increase in prices, although they are still around 47% below their 2007 peak.”
Economists expect that recent changes to stamp duty announced by the chancellor, George Osborne, which will involve 98% of buyers paying lower amounts in tax, will have only a limited impact on the slowdown in house price growth.
Howard Archer, chief economist of IHS Global Insight, said: “While the stamp duty reform should have some beneficial impact on the housing market, we doubt it will cause housing activity and prices to see a major turnaround. We expect house prices to rise by a solid but unspectacular 5% in 2015.”
Falls in the volume of mortgage activity, tighter affordability checks, and the prospect of potentially higher interest rates in 2015 are all seen as factors holding back buyers.