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House prices rose at the slowest annual rate in the U.K. in more than a year as the property market continued to lose momentum across the country, according to mortgage lender Nationwide.
House prices rose 7.2% in the year to December, the smallest annual increase since November 2013 and slowing for a fourth consecutive month.
Housing market activity and price rises have been slowing since the middle of the year, in part because of steps by regulators to require lenders to make tougher checks on borrowers’ ability to repay mortgages. Still, house price growth in the three months to December rose 1.0%, from 0.9% in the preceding three months. Although annual house price growth cooled in 12 out of 13 regions, Nationwide said it expected the market to recover next year.
“If the economic backdrop continues to improve as we and most forecasters expect, activity in the housing market is likely to regain momentum in the months ahead,” said Robert Gardner, Nationwide’s chief economist.
“There are encouraging signs that construction is starting to pick up. Hopefully, this will set the stage for house price growth gradually converging with income growth in the quarters ahead.” Gardner added that recent changes to the stamp duty land tax could also help to stimulate the housing market.
While Britain looks set to be one of the fastest growing major industrialised economies this year, wage growth is still very weak, making houses hard to afford for many workers.
The Bank of England is also expected to raise interest rates late this year for the first time since 2007.