House price growth stagnates at four-year low

The latest analysis from Halifax has found that in the three months to April house prices rose by 3.8% on an annual basis. This is unchanged from March and the lowest annual rate since May 2013.

Related topics:  Property
Warren Lewis
8th May 2017
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"Unfortunately, low mortgage rates and a shortage of property haven’t been enough to support prices, as is reflected in these figures"

According to the report, he annual rate is now less than half the 10.0% peak reached in March 2016.

Halifax found that house prices in the three months to April were 0.2% lower than in the previous three months, marking the first quarterly fall since November 2012.

Martin Ellis, Halifax housing economist, said: “House prices have stagnated over the past three months. Overall, prices in the three months to April were marginally lower than in the preceding three months; the first quarterly decline since November 2012. The annual rate of growth remained at 3.8% in April, the lowest rate since May 2013.

Housing demand appears to have been curbed in recent months due to a deterioration in housing affordability driven by the sustained period of rapid house price growth during 2014-16. Signs of a decline in the pace of job creation, and the beginnings of a squeeze on households’ finances as a result of increasing inflation, may also be constraining the demand for homes.

A continued low mortgage rate environment, combined with an ongoing acute shortage of properties for sale, should nonetheless help continue to underpin house prices over the coming months.”

Russell Quirk, founder and CEO of eMoov.co.uk, said: “Another slight decline in the rate of house price growth on a monthly basis would suggest that the UK market has begun to naturally adjust after a long period of sustained inflation.

We’ve seen an abundance of buyer demand and a lack of sufficient stock heat the market and it would seem that it is finally beginning to level out. This slow may also be due to a number of other influential factors such as the uncertain political landscape and, it will be interesting to see if the market bounces back over the coming months.

That said, sellers are still seeing the price of their property increase annually and this slow in price growth will no doubt be welcomed by those on the other side of the fence, who are struggling to get on the ladder.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, had this to say: "Unfortunately, low mortgage rates and a shortage of property haven’t been enough to support prices, as is reflected in these figures. But on the other hand we are quite encouraged that the annual level is still above where it was this time last year, bearing in mind the huge increase in demand ahead of the introduction of the 3 per cent stamp duty surcharge last April.

Looking forward, we are finding the market to be relatively balanced between supply and demand and still expect those people who recognise current market conditions to take advantage. The market does seem to be finding a new, slightly lower, level and we are certainly seeing no signs of a more substantial fall.'

Jonathan Harris, director of mortgage broker Anderson Harris, commented: "Mortgage lenders continue to offer rock-bottom rates with HSBC’s lowest ever five-year fix at 1.69 per cent, which was launched last week, proof of that. The issue for buyers is affordability and bridging the huge gulf between incomes and house prices.

There is changing sentiment; the best in class properties are shifting but we are seeing a number of down valuations from surveyors as caution starts to become more prevalent. Vendors are beginning to appreciate that their homes aren’t worth as much as they thought so we are seeing price drops in some areas. This is ultimately better for everyone as people who need to sell will be able to and those who want to buy will also be able to, resulting in a higher number of transactions and better fluidity in the market."

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