November 07, 2016
House prices rose by almost £3,000 in the month of October, but annual property inflation slowed to its lowest level in more than three years, Halifax reported today.
The average price of a home in the UK rose by 1.4 per cent last month to £217,411, on the Halifax house price index - the largest increase since March.
But the struggle buyers face to afford expensive homes, even with mortgage rates at record lows, has led to yearly growth slowing to 5.2 per cent, said Halifax.
 | |
| UK house prices: Annual growth has nearly halved compared to March says Halifax |
Annual property inflation has nearly halved compared to the recent peak of 10 per cent peak in March.
The Halifax report adds to the murky picture put forward on the property market since the Brexit vote. In contrast with Halifax, Nationwide's rival index reported last week that house prices stalled for the first time in 15 months in October.
It said prices are up 4.6 per cent annually and also warned on affordability, as it highlighted that the average home now cost more than six times wages.
Martin Ellis, Halifax housing economist, said: 'This expected slowdown appears to have been largely due to mounting affordability pressures, which have increasingly constrained housing demand.
'Whilst house price growth may ease further in the coming months, very low mortgage rates and a shortage of properties available for sale should help support price levels.' ‘
One factor supporting the property market is the lack of decent homes to buy. Estate agents say that the number of properties up for sale fails to match the demand from buyers.
The stock of homes on the market was largely unchanged, but supply of homes remains ‘historically very low’, Halifax said, putting pressure on prices.
 | ||
| Slowdown: Despite a monthly rise, annual growth is on a downward trajectory |
The big jump in the Halifax index is typical of volatile monthly figures and economists say not too much should be read into such a short-term measure, with three-monthly and annual trends more reliable.
Halifax's October’s surprise jump could in part be a correction after rises of just 0.3 per cent in September and falls of 0.3 per cent and 1.1 per cent in August and July respectively.
Howard Archer, chief economist at IHS Markit Global Insight, said house prices were likely to rise modestly in the near-term as the economy continued to show signs of resilience.
‘However, we suspect that house prices will come under increasing pressure as 2017 progresses and may dip modestly over the year, possibly by around 3 per cent,’ he added.
Halifax said that home sales appeared to have stabilised in recent months after a spike in transactions in the run up to April’s increases in stamp duty for buy-to-let landlords.
UK home sales in the three months between July and September were 8 per cent lower than in the same period last year, indicating an overall softening in activity, according to Halifax.
 | |
| Rival lender Nationwide warned that house prices now cost six times earnings |
Mark Posniak, managing director of Octopus Property, said that the monthly rise ‘should be taken with a pinch of salt’.
‘The quarterly flatness is a much better reflection of where the market is at,’ he said.
‘The low cost of borrowing, weak supply levels and a robust jobs market are preventing prices from falling more sharply.’
However, he warned that as inflation rises, people will feel less well off and will become more cautious, which could translate in fewer transactions.
‘Brexit-related uncertainty remains the key narrative for the UK housing market at present, and last week’s high court ruling on Article 50 could see that uncertainty prolonged for longer than anticipated,’ Posniak added.
Rob Weaver, director of investments at property crowdfunding platform Property Partner, said: 'Despite a clear softening in house price growth due to questions over affordability and demand from investors, the dust has seemingly started to settle.
'The market suffered an initial wobble post-Brexit but is proving resilient, mostly the result of the severe supply shortage that’s helping to prop up prices.'
No comments:
Post a Comment