House prices fell in February for the first time in five months, taking the annual rate of increase to its lowest since September 2013, figures from mortgage lender Nationwide showed on Monday.
The housing market has been slowing since the middle of 2014, when regulators tightened mortgage lending rules, though a pick-up in home loan approvals in December caused some economists to think this might be coming to an end.
Nationwide’s figures showed that house prices dropped by 0.1 per cent in February, however, well below the 0.3 per cent rise seen in January. Economists had forecast another 0.3 per cent rise in February.
Looking at the three months to February - a measure some economists prefer, as it smooths out volatility in the data - house prices rose by just 0.8 per cent, the weakest increase since the three months to May 2013.
Annual house price growth of 5.7 per cent was the lowest since September 2013.
But Nationwide said the underlying picture of improving wages and cheap mortgage rates was likely to cause house prices to rise faster than in recent months, a view shared by Howard Archer, an economist at consultancy IHS Global Insight.
“We suspect that the weakening of housing market activity is now bottoming out and we see it picking up to a limited extent in 2015 from current levels,” Mr Archer said.
Figures last week from the British Bankers’ Association showed that mortgage approvals by its members rose in January.