Housing market shows signs of cooling

The UK’s biggest mortgage lender believes house price rises may have peaked thanks to the cost of living and the prospect of higher interest rates.

Data from Halifax, which is part of Lloyds Banking Group, shows the average house price now stands at £187,188, up 9.6 per cent compared to £170,931 a year ago.

But over the last three months house price growth has slowed to 2.7 per cent, down from 2.9 per cent in August and 3.5 per cent in July.

The figures follow similar news from Nationwide, which last month reported the first monthly fall in house prices for 17 months.

Halifax believes the dip in house price growth and the number of sales is down to a number of factors driving weaker demand.

Housing economist Martin Ellis says: “The recent rapid rise in house prices in some parts of the UK, earnings growth that remains below consumer price inflation and the possibility of an interest rate rise over the coming months appear to have tempered housing demand.

“Annual house price inflation may have peaked around 10 per cent. A moderation in growth looks likely during the remainder of 2014 and into next year as supply and demand become increasingly better balanced.”

Natalie Holt