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[LONDON] British house prices rose at their slowest annual pace since May 2013 at the end of last year, as tighter lending rules and a looming national election weighed on buyer demand, an industry body said on Thursday.
The Royal Institution of Chartered Surveyors (RICS) said its monthly house price balance sank to +11 in December from +13 a month before. The index measures surveyors' assessment of whether house prices have risen or fallen on an annual basis over the previous three months.
Britain's housing market has been slowing since mid-2014, when regulators required banks to make closer checks on whether borrowers would still be able to afford mortgage repayments if interest rates rise sharply.
Mortgage lender Halifax said last week that house prices in the fourth quarter of 2014 were up 7.8 per cent on the year, down from a peak of 10.2 percent in July.
RICS said that as well as tighter lending rules, the national election due on May 7 was also causing both buyers and sellers to pause for thought. "With new instructions still flat at a headline level as has been the case for most of the last year it seems implausible that the dip in demand will result in very much of a decline in house prices," said RICS chief economist Simon Rubinsohn.
RICS said its members continued to expect that a cut in property transaction tax for homes costing under 937,000 pounds announced by finance minister George Osborne in December would boost prices and sales by 2-5 per cent in 2015 as a whole.
But prices and volumes were expected to fall in London, as expensive homes would be subject to higher taxation, RICS said.
RICS reported in November that house prices in London fell at their fastest rate since October 2010, and the pace of decline eased only slightly in December.