House price inflation falls

House prices have slightly declined, according to the ONS.

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By :  ,  Financial Analyst

House price inflation in the UK has fallen again, according to figures from the Office for National Statistics (ONS).

The government department noted that the annual rate of house price inflation stood at 7.2 per cent for February, down from the 8.4 per cent recorded in January. It represents the lowest rate for over a year but the short-term reality is that prices grew by 0.6 per cent on a seasonally-adjusted basis between January and February.

Following the publication of the results, the ONS confirmed that the average house price across the UK is now £268,000. Alongside the fall in inflation there has also been a drop in homeowner house purchase lending, according to figures from the Council of Mortgage Lenders (CML).

The organisation noted that the number of loans advanced totalled 40,600 for February. This represented a one per cent fall from January and a 16 per cent drop from the same period a year earlier. The loans reached a total of £6.8 billion which was three per cent less than the total figures reached in January.

Paul Smee, director general of the CML, said: "This typical seasonal trend may also be exacerbated by uncertainty ahead of the general election, but we still expect to see an upturn in the spring and summer months.

"Buy-to-let, in contrast, has shown year-on-year lending increases, due almost completely to remortgaging which is typically strong in the buy-to-let market."

Buy-to-let success

The government's buy-to-let scheme has provided people with great opportunities to step into the property market and recent figures have shown that it has helped to create two million private landlords since its inception in 1996. During this time they have enjoyed returns of almost 1,400 per cent.

A report by Wriglesworth Consultancy for peer-to-peer lender Landbay found that if a person invested £1,000 in a rental property in the late-1990s they would have returns of £14,897 by last year.

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