House price growth continued to slow last month, providing further evidence that the market is losing steam following last year’s Brexit vote and the announcement of the snap election.
According to the latest Halifax House Price Index, annual house price growth eased to 3.3% in May, down from 3.8% in April. This took the average price of a property to £220,706.
Quarterly house price growth fell 0.2% between March and May.
Last month’s house price index showed the first quarterly fall since November 2012.
On a monthly basis, house prices went up by 0.4% between April and May.
Martin Ellis, Halifax housing economist, said that the lack of supply would continue to support prices in the coming months.
“The fact that the supply of new homes and existing properties available for sale remains low, combined with historically low mortgage rates and a high employment rate, is likely to support house price levels over the coming months.”
Supply remains very low, with the number of properties coming on to the market falling for the 14th consecutive month in April, according to a recent report by the Royal Institution of Chartered Surveyors. This kept the average stock levels on estate agents’ books close to an historic low.
Data from HM Revenue and Customs shows that the number of residential property transactions fell by 3.2% to 99,910 between March and April.
Experts believe the ongoing uncertainty surrounding Brexit compounded by the snap election called have contributed to the slowdown in the housing market.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The Halifax figures are interesting as they reinforce findings from other recent surveys, suggesting that we should be concentrating not just on increasing supply of new homes but encouraging existing homeowners to move.
“Buyers and sellers have been in limbo recently with the market awaiting more certainty from the general election and Brexit negotiations. However, the good news is that there is no sign of market collapse while mortgage rates remain low.”
The figures add to the mounting collection of data which points to the housing market becoming increasingly affected by the growing squeeze on incomes and affordability pressures.
Since last year’s Brexit vote, consumers have faced a loss in spending power as a result of rising inflation following a fall in the pound.
Combined with slowing wage growth, households are beginning to feel the pinch as their disposable incomes start to fall.
Mortgage approvals have also fallen for a third consecutive month.
According to figures from the Bank of England, the total number of mortgages approved fell by over 3,000 to 118,370 in April.
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