29th January 2016
British house prices rose at a slower pace than expected in January after a fall in mortgage approvals the month before, although that momentum should pick up in 2016 as a whole.
House price growth cooled to 0.3 percent month-on-month from December's eight-month high of 0.8 percent, causing year-on-year growth to drop to 4.4 percent. Mortgage approvals in December for house purchase dropped to a seven-month low of 43,975 on a seasonally adjusted basis. Britain's housing market played a big role in past economic booms although there seems to be little danger to financial stability apart from mild concern about a surge in lending to fund investment properties. Data also showed a drop in net credit card lending in December from November, in line with earlier soft retail sales figures.
With interest rates also likely to stay on hold for longer than previously anticipated, the demand for homes is likely to strengthen in the months ahead. The concern remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability
Other gauges of house prices have also pointed to renewed momentum in the market after tougher rules on mortgage borrowing introduced in 2014 temporarily cooled the pace of house price inflation. Annual house price growth shows weaker price rises than the most recent official figures, which showed a 7.7 percent annual rise in November./p>