UK house prices: Growth dips to 8.8 per cent as mortgage cooling measures take their toll

Emma Haslett
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House price growth has fallen, suggesting cooling measures are beginning to have an effect (Source: Getty)

"Cooling measures" introduced by the Bank of England earlier this year have taken their toll on house prices. Annual growth slid to 8.8 per cent in October, figures by Halifax showed this morning, down from 9.6 per cent in September.

The quarterly figure painted an even gloomier picture, with growth of just 0.8 per cent between August and October, compared with 2.7 per cent in September and 2.9 per cent in August. And although the month-on-month change in prices looked downright depressing, falling 0.4 per cent, it is inclined to jump about - so isn't necessarily a good indicator of what's happening in the wider market. Still, it was the fifth monthly decline in the past year.

Figures from HM Revenue and Customs out last month showed house sales fell to 97,450 in September, their lowest level since October, while the Bank of England's lending figures showed mortgage approvals have now fallen 20 per cent since January's peak of 76,500.

In June, the Bank of England introduced "stress tests" for borrowers applying for mortgages. They were designed to decrease household indebtedness, but have had an increasingly clear knock-on effect on house prices.

Stephen Smith, director of Legal & General's Mortgage Club, said the figures show prices are "steadying".

Although this may feel like the housing market is slowing down it is important to remember that the past year has seen an annual increase of 8.8%. This level of growth is not sustainable. House prices need to grow at a similar rate to wage inflation for the market to be stable and healthy in the long term.
There is a danger if things continue as they are that people will get priced out of the market. To continue to grow sustainably, we need to be building more houses as demand still outstrips supply. However, as we approach the general election, it is good to see this issue moving towards the top of the political agenda.

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