House prices come off the boil, says Halifax

The annual rate of house price growth has halved over the past six months - from 16% to 8% - illustrating the extent of the property market's slowdown since the start of the year, according to new figures yesterday from the Halifax.

July saw a 0.3% increase in UK house prices, lifting the average price to £84,276. The small rise cancels out the 0.3% fall registered in June, and means the cost of an average home is almost unchanged on March, when it was £84,117. However, last month's rise compares with the 1.6% increase seen in July 1999.

The annual rate of house price inflation continued its downward trend, falling for the third month in a row. It now stands at 8% - the lowest figure since June 1999, when it was 6.6%. In January this year property price inflation was running at 16%.

Further evidence that the housing boom is over was provided by Inland Revenue figures showing that the number of house sales in England and Wales was 4% lower in the period April to June compared with the first three months of this year, said a Halifax spokesman. The figures come hard on the heels of data from rival lender Nationwide, which said the cost of an average home fell 0.2% in July.

The Halifax said this "softening" in the housing market was consistent with recent signs of reduced growth in consumer spending and retail sales, suggesting that household sector demand is less buoyant than a few months ago.

"The four mortgage rate rises between last September and February and the abolition of mortgage interest tax relief in April are the two key factors explaining the housing market slowdown," it added.

The Halifax joined the Nationwide in arguing that a repeat of the early 90's crash was unlikely, pointing out that the economy is "in good shape", housing affordability at a national level remains favourable and, despite the rate rises, mortgage payments still swallow up less than a quarter of a typical first-time buyer's gross pay.

"These factors should support a steady housing market over the remainder of the year," said the spokesman.