Halifax confirms housing slowdown

Further evidence that the housing market is starting to slow emerged today from Britain's biggest mortgage lender Halifax, who said that prices rose just 0.2% in August.

Halifax said that following a rise of 2.4% in June and 1.8% in July the average house price in the UK had risen just 0.2% last month to ?111,968, the smallest monthly increase since October last year. The bank said this had slowed the annual rate of house price inflation from nearly 21% in July to 18.8%.

The report attributed much of the slowdown, particularly in the south east of the country, to rises in the number of houses available, the first time housing stock has risen in seven months.

'The UK housing market has been very strong in 2002 but house price growth has gradually eased over the last three months. Indicators of housing market activity, whilst confirming a buoyant marketplace, also show some early signs of slowing,' said Gary Styles, head of group economics at Halifax.

'We expect house price growth to continue to slow in the coming months as more sluggish income growth, some increase in supply and lower buy-to-let volumes reduce overall demand pressure in the market."

The bank added that the ratio of house prices to average earnings had risen to 4.2%, which was slightly higher than in the same period last year. It said that earnings had failed to keep pace with house prices over the last year but that the ratio remains below the all time high of five times earnings.

The report is in stark contrast to that of rival mortgage lender Nationwide, released last week, which said that house prices had surged 2.5% in August and that there was no sign of a slowdown.