House price growth slows to 1.4%

The latest Halifax house price index has revealed that house price growth in the latest three months slowed to 1.4%. The quarterly rate of change fell from October's 2.8% to the lowest since December 2014 (0.3%).

Related topics:  Property
Warren Lewis
8th December 2015
house coin stack

Prices in the three months to November were 9.0% higher than in the same three months a year earlier. This was lower than October’s 9.7%, but within the narrow range seen throughout 2015.

House prices fell by 0.2% between October and November. This followed last month’s 1.0% increase, continuing the monthly volatility seen since the summer.

The value of the UK's private housing stock in August 2015 was estimated at £5.1 trillion, compared with £3.3 trillion in 2005; an increase of £1.8 trillion – or 53% - over the past decade, according to recent research from Halifax. The increase of £1.8 trillion since 2005 is equivalent to £76,316 per household in the owner-occupied and private rented sectors.

Martin Ellis, Halifax housing economist, said: "House prices in the three months to November were 1.4% higher than in the previous three months. This was the smallest rise on this measure since December 2014. The annual rate eased from 9.7% in October to 9.0%.

Solid economic growth, rising real earnings and falls in already very low mortgage rates have combined to stimulate housing demand this year. The increasingly acute imbalance between supply and demand is causing prices to rise at a robust pace. A situation that is unlikely to reverse significantly in the short-term.”

Mark Posniak, Managing Director, Dragonfly Property Finance, added: "The overall rate of growth may have slowed slightly but house prices continue their seemingly inexorable rise. With no immediate solution to the imbalance between supply and demand, house prices look set to continue to rise throughout 2016. The worry is that there is no concerted long-term strategy for tackling supply, either. The lack of properties being put up for sale remains an enigma given that mortgage rates and the cost of living are so low and consumer confidence, overall, is high.
 
Talk of imminent interest rate rises has been going on for a year or two now and it may be that people want more clarity on the speed of rate rises before they commit to a purchase. It's hard to believe that 2016 will see any change in the ongoing narrative of low supply, strong demand and rising prices."

Jeremy Leaf, former RICS chairman and north London estate agent, commented: "As always with the Halifax house-price index the information is restricted to the actions of its own customers so has its limitations, while a national figure for house-price growth should always be regarded with some scepticism. There is evidence of easing house-price growth but one would expect the market to slow a little at this time of year. Much will depend on which part of the country you are in - the north London property market continues to be very busy, for example, a trend we expect to continue right up until Christmas.

Any slowdown in the market may be a short-term blip anyway, as investors are already looking at what will be coming to market in the spring, in order so that they can complete by April to avoid the higher stamp duty take.

The lack of supply is a huge issue and will also contribute to house-price growth over coming months. Encouragingly, construction numbers are up, and the Government is pledging to build more homes, but there is no room for complacency. While everyone agrees that more building is required, the question is whether there is enough capacity in the market - builders, materials etc etc - to get the work done."

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