House prices in the three months to August this year were 6.9 per cent higher than in the same three months of last year – the slowest rate of growth for almost three years.
The annual rate of growth slowed from 8.4 per cent in July, continuing the downward trend since March when the annual rate reached 10 per cent, according to the Halifax house price index. The figure for August is the lowest yearly growth rate since October 2013 (6.9 per cent).
The slowdown in the growth rate was faster than analysts expected – prices were forecast to grow by seven per cent.
"There are two aspects influencing price declines," said Joshua Raymond, market analyst at XTB.com.
"First and foremost, August is historically a weak month for sales with many buyers preferring to go on holiday than look for house purchases, triggering less demand and applying downward pressure on prices paid.
"Secondly, the impact of the Brexit in sapping consumer confidence, especially at the top end of the market, despite the fall in the pound potentially attracting foreign buyers."
Raymond added that it will be important to keep an eye on whether prices decline in the September to November period, "where demand is typically higher than the summer months and will give us better evidence of the potential for a looming house price correction, especially in London".
Meanwhile, house prices for the quarter were 0.7 per cent higher than in the preceding three month period.
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"House price growth continued the trend of the past few months in August with a further moderation in both the annual and quarterly rates of increase," said Martin Ellis, Halifax housing economist.
"There are also signs of a softening in sales activity. The slowdown in the rate of house price growth is consistent with the forecast that we made at the end of 2015.
"Increasing difficulties in purchasing a home as house prices continued to increase more quickly than earnings were expected to constrain demand, curbing house price growth.”