House price growth slows across UK

House prices are still increasing across most of the UK, but at a slower pace.

The annual rate of house price inflation fell to 7.2 per cent in February according to the Office for National Statistics - down from 8.4 per cent in January, and the lowest rate for more than a year.

On a month-to-month seasonally adjusted basis, prices increased by 0.6 per cent between January and February. ONS data last month had shown that prices fell 0.2 per cent between December and January, the first decline since last March.

The average UK house price is now £268,000, 0.8 per cent below the August 2014 record. But that figure is still 11.1 per cent higher than the 2008 pre-financial crisis peak.

House price inflation was highest in England, at 7.4 per cent, compared with 1.1 per cent in Wales, 6.4 per cent in Scotland and 14.2 per cent in Northern Ireland.

The ONS said the increases in England had been driven by jumps in the east of 10.7 per cent and in London of 9.4 per cent, making it an increasingly tough climate for first time buyers.

The ONS figures, which are based on mortgage completions, tend to lag behind other private sector data.

Howard Archer, UK economist at IHS Global Insight, said he suspected activity was "bottoming out" after losing momentum early last year, but would pick up modestly over coming months. He predicted prices would rise about 5 per cent in 2015.

The latest data came alongside news that the number of loans extended by UK banks and building societies for house purchases fell 1.5 per cent month on month in February, amid fears that the outcome of the general election could dampen demand.

Home purchase loans dipped to 40,600 in February, a 16.3 per cent decline on the same period in 2014. Paul Smee, the CML's director-general, said seasonal factors had not helped the market, with February traditionally a less popular month for house buying.

"This typical seasonal trend may also be exacerbated by uncertainty ahead of the general election, but we still expect to see an upturn in the spring and summer months," he said.

The continuing moderation of the UK's property market will be welcomed by the Bank of England, which has taken steps to reduce price increases, particularly in London and the southeast.

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