House prices fell in January for the first time since August, signalling a slowdown in the market, new figures show.
According to the latest Halifax House Price Index, house prices fell 0.9% in January after jumping 1.6% in in December.
Annual house price growth went up 5.7% in January, down from 6.5% the previous month. This took the average house price to £220,260.
Martin Ellis, Halifax housing economist, said: “The quarterly and annual rates of house price growth remain robust even though they are lower than in spring 2016. UK house prices continue to be supported by an ongoing shortage of property for sale, low levels of housebuilding, and exceptionally low interest rates.
“These factors are unlikely to change materially during 2017. Nonetheless, weaker economic growth and increasing pressure on spending power, along with affordability constraints, are expected to dampen housing demand, resulting in some downward pressure on annual house price growth during the year.”
Halifax expects annual house price growth to slow between 1-4% by the end of the year as year.
The number of first-time buyers is estimated to have risen by 7% in 2016 to 335,750 – the highest level since the start of the financial crisis in 2007.
Total UK home sales in 2016 were marginally higher (+0.4%) than in 2015 at 1.23 million.
Supply remains very low. Nationally, new instructions to sell failed to pick-up in December, marking the tenth successive month without any improvement in the flow of new listings. As a result, stock levels remain close to a record low, severely restricting choice for would-be buyers and constraining market activity.
Howard Archer, chief economist at IHS Global Insight, said: “While latest data points to a pick-up in housing market activity from August’s low, it is still hardly racing ahead.
“January’s correction in house prices reported by the Halifax fuels our belief that house price gains over 2017 will be no more than 3%. We suspect that housing market activity and prices will come under increasing pressure as 2017 progresses from weakening fundamentals.”
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