House price growth crashes to 5 year low

Muriel Colon
August 17, 2018

Britain's inflation rate picked up in July for the first time this year, leaving many British households feeling squeezed by prices that are rising at about the same pace as their salaries.

The latest increase was the smallest since August 2013, when prices grew 3 percent.

'Prices have grown by 3 per cent since last June, the slowest annual rate for almost five years.

The Consumer Price Index (CPI), which measured inflation continued on downward trend in July by dropping to 11.14 per cent (year-on-year) from 11.

The National Institute for Economic and Social Research, a think tank, said its measure of core inflation, stripping out extreme price moves, fell and looked set to bring inflation down to the Bank of England's 2 percent target within a year.

The strongest performer was the West Midlands, which experienced house price growth of 5.8%.

Manufacturers raised the prices they charged by 3.1 percent, weaker than June's 3.3 percent but slightly above the forecast in the Reuters poll.

Earlier this week official figures showed wages growth falling steadily over recent months, from 2.8% in February to 2.4% in June.

Unsurprisingly, despite the fall, London remained the most expensive region with the average property costing £476,752 while the North East was the cheapest at £127,271.

Wednesday's inflation figures show that increases in computer games and transport were partially offset by falls in the price of clothing.

'The big question is what happens to prices when the property market's own version of Quantitative Easing is taken away?' The lowest annual growth was in London, where prices decreased by 0.7% over the year, down from negative 0.2%.

Annual growth in house prices has slowed since mid-2016 and has remained under 5%, with the exception of October 2017, throughout 2017 and into 2018.

By property type, semi-detached houses showed the biggest increase, rising by 4.4 per cent in the year to June 2018 to £216,000.

Jonathan Samuels, CEO of Octane Capital, said: "That the annual growth rate in London is at its lowest level since September 2009, when the United Kingdom economy was reeling from the Global Financial Crisis, underlines the weakness of the capital's property market". London accounts for around 25 per cent of all United Kingdom flats and maisonette transactions.

Estate agent Lee James Pendleton said: 'The most troubling numbers here are easily the growth figures for new builds.

The dwindling and slowing house increases could highlight the beginning of a stagnant and struggling time for house sales.

There has been a rise in time taken to complete a property sale from 16 weeks a year ago to 18 weeks on average.

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