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Sluggish Growth On British House Prices Due To Mortgage Approvals Dip

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January 30
3:18 AM 2016

After a plunge in mortgage approvals last month, there are no significant raises on British house prices. Eventhough mortgage lender Nationwide mentioned that 2016 was the time of the increasing house prices, the prices do not hike as fast as what has been expected before.    

From a Reuters poll, the growth on house prices has dropped from 0.8 percent in December's eight-month high to 0.3 percent this month-on-month. Nationwide reported that it was lower than the expectations and resulted in a year-to-year growth fall to 4.4 percent.

According to the British Banker's Association, the December's mortgage approvals plunged to seven-month low of 43,975 for house purchase on a recurrently amended basis.

Though the Bank of England does not see any serious threats to the stability of the country's finance, Britain's housing market had an important part in previous economic booms. It might cause "mild concern" related to the investment properties lending.

Howard Archer, IHS Global Insight's chief UK economist, said, "The housing market has come modestly off the peak levels seen around August. It may also be that a shortage of properties on the market is limiting housing market activity."

Slower price increases are shown from the Nationwide's measure of annual house price growth. It confirms 7.7 percent annual rise in November, which is weaker than the other most official results recently.  While rival Halifax' measure reports a rise of 9.5 percent in the fourth quarter.    

Meanwhile, as stated in The Guardian, Robert Gardner, chief economist at the building society, stated that the growth rate stays steady in general. However, he shared his worry by mentioning, "The concern remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability."

The National Association of Estate Agents (NAEA) said that there was a traditional December drop on the number of house hunters registered with each agent. But it was still higher than the figure in December previous year. Approximately there were 374 registered buyers, which is lower than 403 in November. However, it was still higher than the 360 registered buyers in 2014.  

"Cheap mortgage rates have certainly helped fuel the growth in lending in the market seen throughout 2015. However, we have probably seen the back of the very cheapest deals," said Mark Harris, chief executive of mortgage broker SPF Private Clients according to BBC.

In the upcoming months, there is a warning from Nationwide that the house demand is likely to increase. This is because of the labor market that gets stronger and the wages raise, as well as the unchanged interest rates of 0.5%, which stays longer than expected.   

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