U.K. House Prices Increase at Slowest Pace in Four Years

  • Prices grow 2.6% from a year ago, slowest pace since May 2013
  • Rising inflation, tax changes continue to weigh on demand

U.K. house prices grew at their slowest pace in four years in June, adding to signs that the property market is cooling.

Prices grew 2.6 percent compared with a year earlier, lender Halifax said in a report on Friday. On a quarterly basis, they slipped 0.1 percent, and they declined 1 percent from a month earlier.

Almost every gauge of British house prices is now showing a slowdown. Mortgage approvals fell to a seven-month low in April, according to the Bank of England, as rising inflation hampers consumer spending. Tax changes and uncertainty around Britain’s exit from the European Union may also be crimping demand.

“Although employment levels continue to rise, household finances face increasing pressure as consumer prices grow faster than wages,” said Martin Ellis, Halifax housing economist. “This, combined with the new stamp duty on buy-to-let and second homes in 2016, appears to have weakened housing demand in recent months.”

Nonetheless, a continued low mortgage-rate environment alongside a shortage of properties for sale should help support prices, he added.

— With assistance by Ainhoa Goyeneche

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