UK house price growth slowest since 2013

London - British house prices rose last month at their slowest annual pace since May 2013 and fell for a fifth month in London, according to an industry survey that suggested political uncertainty ahead of a national election is crimping demand.

The Royal Institution of Chartered Surveyors (Rics) said its monthly house price balance sank to +7 in January from +12 in December, below all forecasts in a Reuter’s poll of economists.

The index measures the assessment of surveyors 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.

The survey showed house prices fell in London for a fifth consecutive month, with its price balance for the capital falling to a six-year low.

Rics said a national election on May 7 was also causing both buyers and sellers to pause for thought.

Opinion polls show the election race is too tight to call. The opposition Labour Party has said it would introduce a tax on properties worth more than £2m. Some investors are worried about the ruling Conservative Party's pledge to hold a referendum on Britain's European Union membership.

"Anecdotal evidence from respondents suggests that a multitude of factors are impacting different markets, with political uncertainty weighing to some extent on all parts of the UK," Rics said.

The survey also suggested slow progress would be made in bringing new houses to the market.

"(The) volume of home starts will still fall considerably short of the number of new households being formed, let alone making a dent in the historic shortfall of housing across all tenures," said Simon Rubinsohn, chief economist at Rics.

British house prices jumped unexpectedly last month, recording their biggest rise since May 2014, according to mortgage lender Halifax. But it said it expected the overall pace of house price rises to slow this year.