House prices are growing at the slowest rate for five years, Halifax says
Economists suggested the figures show that a modest rise in mortgage rates in recent months has hit the housing market hard
HOUSE prices are growing at the slowest rate for five year, according to Halifax.
The UK's biggest mortgage provider said prices are up by 1.8 per cent annually - the smallest increase since a 1.1 per cent rise in March 2013.
Economists suggested the figures show that a modest rise in mortgage rates in recent months has hit the housing market hard.
Further increases in new mortgage rates are expected in the coming months.
Year-on-year house price growth is now less than half the rate seen just a few months ago. In November, a 3.9 per cent annual increase was recorded.
House prices increased by 0.4 per cent month-on-month in February, following falls in December and January.
The average UK house price in February was £224,353, down slightly from November's high of £226,408.
On a quarterly basis, house prices between December and February were 0.7 per cent lower than in the preceding three months - the first decline on the quarterly measure since May last year.
Russell Galley, managing director at Halifax, said: "House prices continue to remain broadly flat, as they have since the end of last year.
"The annual rate of growth has slowed from 2.2 per cent in January to 1.8 per cent in February, the lowest rate of growth since March 2013."
He continued: "While we expect price growth to remain low, the low mortgage rate environment, combined with an ongoing shortage of properties for sale, should continue to support house prices over the coming months."
Howard Archer, chief economic adviser at EY ITEM Club, said: ";The Halifax data fuel our belief that 2018 will be a difficult year for the housing market and price gains over the year will be limited to a modest 2 per cent."
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the slowdown in annual house price growth "demonstrates that even the modest rise in mortgage rates over the last few months has hit the market hard".
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Mr Tombs said new mortgage rates remain on course to rise sharply over the coming months, given that wholesale funding costs have increased since the start of the year.
He said: "New buyers will have to devote a much larger share of their annual incomes to monthly loan repayments in order to borrow as much as their predecessors.
"Admittedly, a slight uptick in wage growth and a continued lengthening of mortgage terms will provide some counterbalancing support to prices.
"But the rise in mortgage rates will be the dominant influence on the market, depressing demand and ensuring that house prices merely hold steady this year."
Property search portal Zoopla today revealed the top locations for first-time buyers looking to get on to the property ladder.
Last month, a report by the Institute of Fiscal studies revealed how the number of young adults on middle income becoming homeowners has halved thanks to rising house prices and stagnant wages.
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