U.K. House Price Growth Adds Weight to Predictions of a Slowdown

(Bloomberg) -- The pace of U.K. annual house price growth slowed in February, adding weight to predictions of waning momentum in 2017, according to Halifax.

In the three months to February, prices rose an annual 5.1 percent compared with a 5.7 percent pace in January. That's almost half the 10 percent peak seen in March. Values rose 0.1 percent from a month earlier.

Halifax expects price growth to slow to between 1 percent and 4 percent by the end of the year as the economy loses steam. The average British house price last month was 219,949 pounds ($268,000) and supply remains very low with average stock levels on estate agents' books close to the least on record, according to the report.

“A sustained period of house-price growth in excess of pay rises has made it increasingly difficult for many to purchase a home,” Martin Ellis, an economist at Halifax, said in a statement with the report. “This development, together with signs of reduced momentum in the jobs market and squeezed consumer spending power, is expected to curb house price growth during 2017.”

Even so, mortgage affordability has improved. Typical payments for new borrowers ended last year at 30 percent of earnings, compared with the peak of 48 percent in 2007, the Halifax said.

To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net.

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Brian Swint, Andrew Atkinson