House price increase 'slowest since April 2013'
Government lending reforms could be starting to cool the UK property market as prices increased at their slowest rate since April 2013.Nationwide's latest house price index reveals residential property prices increased by just 0.1 per cent during July. This led to a moderation in the annual rate of growth, which was down from 11.8 per cent in June to 10.6 per cent last month.The building society's chief economist, Robert Gardner, said this slowdown was "not entirely unexpected", as there has been evidence of more balanced activity in previous months.There was a 20 per cent fall in mortgage approvals between January and May, and some forward-looking indicators, such as new buyer enquiries, have also softened.Macro-prudential regulations were recently introduced by the Bank of England's Financial Policy Committee to curb excessive lending, including affordability tests and a 15 per cent limit on the proportion of new mortgages with loan to income multiples at or above 4.5.However, Mr Gardner stressed that the latest trend is likely to be temporary. June witnessed a modest rebound in the mortgage market, while a range of factors - rising consumer confidence, low mortgage rates and a strengthening labour market - mean activity could recover in the months ahead.Nationwide noted that there has been a sharp increase in stamp duty levels in recent years, due to a recovery in housing transactions, continued price growth and the introduction of higher rates of the levy on more expensive properties."Variation in house prices have a strong impact on how much stamp duty is paid across different regions of the UK, with some regions contributing a much greater share of the total stamp duty revenues than their share of housing transactions might suggest," Mr Gardner said.London is estimated to have contributed around 42 per cent of the total stamp duty paid on residential properties in 2013-14, despite accounting for only around 15 per cent of transactions. In contrast, the north-west, with ten per cent of transactions, contributed just three per cent of stamp duty.
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