UK house prices have reduced by 0.3% in the last month while surveyors have reported a fall in the housing stock coming to the market.

Latest data from the Halifax shows UK house prices have reduced to February by 0.3% following a rise of 1.9% in January.

Over the quarter prices are higher by 2.6% than the previous quarter with average house prices now at £192,372 while the average annual change in prices is now 8.3%, down slightly from the January figure of 8.5%.

Halifax housing economist, Martin Ellis, said the quarterly figures are a safer indication of house price movement than the monthly figures.

The recent improvements were due to increases in real earnings and spending power. Also, the falls in mortgage rates have benefited first time buyers, home movers and remortgage buyers, buy-to-let landlords.

London housing market slowing

A recent report from the Royal Institution of Chartered Surveyors (Rics) indicates a slowdown in the number of new homes coming to the market.

For London, 17% of surveyors recorded a fall in housing stock, the lowest level during 2014. Further 28% of surveyors reported decreasing prices in London, although this is down from 46% reported in January.

Rics has said that the political uncertainty ahead of May’s general election could have encouraged vendors to delay selling their homes resulting in a fall in the supply of housing stock.

The number of house sales has decreased for the fourth consecutive months in the UK to January and sales for the quarter were 2.5% lower than the previous quarter.

Prices expected to rise

Even though there is a slowdown in the property market, surveyors expect a rise in UK house prices by 2.4% over the next year and a 4.5% rise in the next five years.

One advantage of rising house prices for homeowners in the next few years is remortgage buyers will be able to release capital for home improvements.

Higher property values allows the equity release mortgage buyer to access money using a lifetime mortgage and use this to consolidate debt, holidays or even help your children start or expand a business.

For London, Simon Rubinsohn the institution's chief economist said there is a strong view that property will be even more unaffordable in the medium term.

Surveyors have suggested that house prices will rise by 30% in the next five years. For home movers this would increase the gap between their existing home and the next, so they need a larger mortgage which they may not be able to afford.

These price rises will make it more difficult for first time buyers to secure their first home and Buy-to-let landlords may also need larger deposits in order to meet rental income minimums from lenders.

Another factor to push house prices higher is the rate of construction of new build homes. According to the Halifax, the number of homes completed increased by 8% from 109,490 in 2013 to 118,760 in 2014.

This latest figure remains 33% below the total number in 2007 and well below the demand for new builds. The number of new homes being started in the last quarter of 2014 is 9% lower than that time the previous year.

What are your next steps?

Talk to our London City Mortgage advisers if you are an older homeowner releasing equity from your property, we can recommend the lifetime mortgage to access wealth for home or garden improvements and holidays.

At LCM our mortgage brokers can provide advice if you are a first time buyer, moving home, want to remortgage your existing home to a new cost effective mortgage deal or are a buy-to-let investor.

Learn more by using the equity release calculator, property value tracker chart and mortgage monthly cost calculator. Start with a free mortgage quote or call us and we can take your details.

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