April house prices in sharpest slowdown since 2006

House price growth across the UK slowed at the fastest pace for nine years in April, according to official figures, as London prices weakened amid unfounded fears of a Labour election victory.

Prices rose at an annual rate of 5.5%, down from 9.6% in March, the Office for National Statistics said. The month-on-month slowdown was the biggest since April 2006.

 The main cause was a sharp weakening of London property prices, which grew more slowly than the UK average for the first time since early 2006.

Buyers and sellers in London were said to be concerned before May’s election about Labour proposals for a mansion tax. The ONS said April’s figures continued a trend of weakening prices that started in September 2014, when house price inflation was running at 12%.

Price increases slowed in all parts the UK apart from Northern Ireland, where annual growth strengthened to 8.8% from 7.5% a month earlier.

 In England, annual growth slowed to 5.8% from 9.4% in March while in Wales prices rose 1.3%, down from 5.7%. The biggest slowdown was in Scotland, where growth was 2.2% compared with 14.6% in March.

 The ONS said: “The UK housing market showed signs of easing in April 2015. One of the largest drivers of this fall was the sharp weakening in London annual house price growth, where house prices grew at a slower annual rate than the UK average for the first time since February 2006.”

 Commentators who blamed uncertainty before the election for the slowdown in the housing market have predicted renewed price growth under a majority Conservative government. But Nationwide building society said this month that price increases eased in May as well.

 The ONS did not mention the election in its analysis of the figures but it said positive news for the wider economy could help support house prices.

“Broader economic indicators suggest that the economy continued to grow relatively strongly during the first quarter of 2015, which may in turn feed into consumer expectations of the housing market.

 “Labour market conditions have continued to improve, as unemployment fell to 5.5% in the three months to March 2015. Recent weakness in inflationary pressure and a return of nominal earnings growth have also improved the economic position of households, with possible implications for the evolution of house prices.”

theguardian.com