UK house prices grew more slowly than expected in April, with the pace of growth compared to the previous quarter and to the same period last year at its lowest level since last autumn.
Mortgage lender Halifax said on Monday (9 May) that its house price index fell 0.8% month-on-month in April, while data showed house prices in the three months to April were 9.2% higher than in the corresponding period a year ago.
However, the rate of growth was lower than the 10.1% registered in March and of the 9.6% rise analysts expected. Between February and April, house prices grew 1.5% compared with the previous quarter, sharply slower than the 2.9% growth rate posted in March.
"Both the quarterly and annual rates are at their lowest since last autumn," said Martin Ellis, Halifax housing economist.
"Current market conditions remain very tight as the severe imbalance between supply and demand persists. This situation, combined with low interest rates and rising employment and real earnings, should continue to push house prices up over the coming months."
Ellis, however, added that a decline in consumer confidence and weakening sentiment regarding house price prospect indicate annual house price growth is likely to ease. Concerns about Brexit and a hit from a clampdown on buy-to-let property were both identified as the main reasons behind the slower than expected growth and economists expect a decline in buyer interest from the buy-to-let and second house buyers given the recent rise in Stamp Duty.
"Increased domestic economic and political uncertainties are also likely to rein in housing market activity in the run-up to June's referendum on UK membership of the European Union," said Howard Archer, chief UK and European economist at IHS Global Insight.
"Consequently, house prices may well be softer for the next few months."
He added the rate of price growth is expected to pick up in the second half of the year, particularly once the doubts surrounding Britain's future within the EU are cleared up. Analysts at Pantheon Macroeconomics echoed Archer's sentiments and suggested the Brexit-driven uncertainty might only affect house prices in London's prime locations.
"Brexit fears might subdue prime London property prices, but previous bouts of political uncertainty have seldom depressed the whole market.
"As such, we expect price growth to remain strong, bolstering the case for higher interest rates to prevent household debts eventually reaching unsustainable levels."