Annual house price growth has fallen back to its lowest rate in more than five years, according to an index.
Across the UK, house prices increased by 1.5% annually in October, following a 2.5% annual increase in September, Halifax said.
Property values increased by 0.7% month on month in October, taking the average house price to £227,869.
Russell Galley, managing director, Halifax, said: “The annual rate of house price growth has fallen from 2.5% in September to 1.5% in October, which is the lowest rate of annual growth since March 2013.
“However, this remains within our forecast annual growth range of 0% to 3% for 2018.
“House prices continue to be supported by the fact that the supply of new homes and existing properties available for sale remains low.
“Further house price support comes from an already high and improving employment rate and historically low mortgage rates which are creating higher rates of relative affordability.
“We see this continuing to be the case over the coming months and we remain supportive of our 0% to 3% forecast range.”
Howard Archer, chief economic adviser, EY Item Club, said the 0.7% month-on-month house price increase in October, was likely to be a correction after a particularly sharp 1.3% month-on-month price dip in September, which had been the second fall in a row following a 0.2% month-on-month decrease in August.
Mr Archer said house prices are typically expensive relative to incomes – standing at around five-and-a-half times earnings in October – well above the long-term average of just over four times earnings seen since 1983.
He said: “It is evident that the housing market is struggling for traction in the face of still limited consumer purchasing power, fragile consumer confidence and wariness over higher interest rates. Brexit uncertainty may also be having some dampening impact on activity.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that while mortgage rates have not increased significantly, Bank of England base rate hikes have made households nervous of taking out mortgages with high loan-to-income ratios.
“In addition, would-be buyers are deferring purchases until the risk of a no-deal Brexit lifts,” he said.
“The housing market looks set to be dormant throughout the winter.”
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: “On the ground, realism is hitting home to many sellers who are starting to appreciate that the first offer they receive could very well be their only one, however unpalatable it may be.”
Source: Yahoo Finance UK