UK house price growth drifts downwards

Property values lifted by 9.6 per cent year-on-year to reach £187,188 on average as the annual pace of growth continued to drift downwards from a seven-year high of 10.2 per cent recorded in July.

On a month-on-month basis, prices edged up by 0.6 per cent, compared with no monthly change in August. Halifax said that house price changes on a quarterly basis tend to give the clearest indication of market trends, as they smooth out any monthly volatility. On a quarterly basis, the pace of price growth is also drifting downwards. House prices in the three months to September were 2.7 per cent higher than the previous three months, down from a quarterly increase of 2.9 per cent in August and of 3.5 per cent in July.

Halifax housing economist Martin Ellis said the rapid rises in house prices seen earlier this year, relatively slow earnings growth and the speculation over the prospect of interest rates rising all appear to have tempered housing demand.

A lack of homes for prospective buyers to choose from had been one of the reasons given for the strong house price growth seen in previous months. But more recently, estate agents have been reporting fewer prospective buyers registering with them, creating a more even balance between the supply of homes and demand.