Articles > House Price Growth Slows... or Does It?

Recent figures from the Office of the Deputy Prime Minister (ODPM) regarding house price inflation show that the market is beginning to slow, with growth figures from February standing at 0.7% lower than the annual inflation rate to January. This slowdown actually caused the average house price in the UK fall from £185,404 to £183,224 between the first two months of this year.

These findings by the ODPM are in opposition to the figures produced by a number of top mortgage lenders, who’s figures show that house prices have continued to climb during February, as well as through the month of March.

So why do these figures vary so wildly, after all they are measuring the same thing, house prices, over the same period? The answer is in the way they record the data, the figures from the ODPM are based on completed mortgages, whereas the figures from the lenders are from approved mortgages – those that have been applied for and given the go ahead, but have not yet been taken out.

Because of the way they are measured, the figures from the ODPM tend to lag behind those from the mortgage lenders themselves, although they are slightly ‘out of date’ in a sense, they are more accurate as they do not include mortgage approvals that have not resulted in the mortgage being completed.

As they do tend to lag behind, the ODPM figures are generally used for more historic comparisons of how the housing market has performed, whereas the approval figures from the lenders gives economists a good way to gauge the current state of the market, and at the moment it seems as though house prices are continuing their upward trend seen since the end of last year.

Many economists believe that the housing market will remain buoyant over the coming months, with the near term seeing similar rises to those reported by lenders over the first quarter of this year, but that the rate of growth will begin to slow as it is unlikely that the economy will be able to support a sustained growth for a long period.