House prices in the United Kingdom showed no variations at the start of the year after falling in the previous four months, and are likely to witness a sluggish housing market throughout this year amid the rising cost of living and higher interest rates, survey data from the Lloyds Bank subsidiary Halifax and S&P Global showed on Tuesday.
The house price index registered no change over the month, following a 1.3 percent decrease in the prior month. Economists had forecast a 0.8 percent fall.
Meanwhile, annual growth in house prices eased further to 1.9 percent in January from 2.1 percent in December. Further, this was the weakest house price inflation in over three years.
The average property price was GBP 281,684 in January, which was largely unchanged from GBP 281,713 in December, indicating only a small decline.
“We expected that the squeeze on household incomes from the rising cost of living and higher interest rates would lead to a slower housing market, particularly compared to the rapid growth of recent years,” Kim Kinnaird, director at Halifax Mortgages, said.
In the near future, this trend is likely to continue as borrowing costs rise and demand is reduced, Kinnaird said.
The recent official data showed that the consumer price inflation in the UK remained at a double-digit figure of 10.5 percent in December versus 10.7 percent in November.
Despite falling to a three-month high, the inflation is still well above the Bank of England’s target range of 2.0 percent.
At its February meeting, the Bank of England raised its benchmark rate by a half percentage point to 4.00 percent, the highest since 2008.
Nonetheless, the outlook for future aggressive tightening softened as inflation is set to return to the target in the medium term.
Among regions, Wales experienced the greatest annual slowdown in growth, with a house price increase of 2.0 percent a year versus 6.0 percent in December.
The South West of England also logged a considerable slowdown in house prices, with the rate of inflation falling to 2.7 percent from 6.0 percent.
London house prices remained flat compared to an annual increase of 2.9 percent in December.
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