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UK house prices rise at slowest pace as purchase power at historic low, report

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Estate agent boards are displayed outside a property in London, Britain. (Photo by Reuters)

Housing prices in the UK in January rose at their slowest monthly pace since June last year, while the affordability remained at its historically low level, according to the UK-based banking company Halifax.

In a report published on Monday, Halifax said house prices in January rose by 0.3 percent from December, as a post-lockdown boom in the housing market started to fade.

"It remains likely that the rate of house price growth will slow considerably over the next year,” said Russell Galley, managing director at Halifax,adding that it there will be a "limited supply of houses for sale.

According to Galley, house price rises outstripped earnings growth this year, and kept the affordability at historically low levels.

Meanwhile, the younger buyers are facing challenges for providing deposits and the growing cost-of-living has added further pressure on the Britons.

“This situation is expected to become more acute in the short-term as household budgets face even greater pressure from an increase in the cost of living, and rise in interest rates begin to feed through to mortgage rates,” Galley said.

Compared with January last year, house prices have risen by 9.7 percent, roughly matching December's annual pace of increase, Halifax noted.

The development comes on heels of rise in interest rates by the Bank of England, doubling it from 0.25 to 0.5 percent in an attempt to tackle soaring inflation in the country.

According to the BoE’s estimation, the UK is set to see its annual inflation rate at the peak of 7.25 percent in April, compared with 5.4 percent last December which was already a near 30-year high. Accordingly, workers also face higher tax payments from April.

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