House price inflation slows
LONDON (Reuters) - House price inflation fell to its lowest rate in almost four years in May, government data showed on Monday, in further evidence the property market is no longer booming.
The Office of the Deputy Prime Minister said house price inflation slowed to an annual rate of 6.0 percent in May from 6.9 percent in April. This was the lowest since the fourth quarter of 2001, the ODPM said.
"This is consistent with the other indicators on the housing market," said Alan Castle, UK economist at Lehman Brothers.
"The overall message from the house price data is one of a gradual slowdown," he said, forecasting the ODPM measure should fall to around zero by autumn this year.
The government figures follow news from Britain's biggest mortgage lender Halifax last week that house price inflation slowed to its lowest annual rate in over four years in June.
Mortgage approvals suggest some levelling out in the market ahead but housebuilders have remained downbeat.
Earlier on Monday, Taylor Woodrow became the latest housebuilder to report tough conditions, predicting margins would remain under pressure.
Last week, rival George Wimpey described the outlook for the market as challenging and predicted a fall in first-half profit of more than 10 percent.
Economists cautioned that the ODPM figures lag other indicators on the housing market and that Bank of England policymakers will focus on more forward looking data such as mortgage approvals and house sales.
Many economists expect the central bank will cut interest rates from their current 4.75 percent within the next few months in order to revive flagging consumer demand.
The ODPM said the average house price in May stood at 182,651 pounds compared with 181,832 pounds in the prior month. The annual rate of house price inflation in London fell to 1.6 percent in May from 2.7 percent in April.
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