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Annual house price growth eased again in May to 3.3% reveals Halifax House Price Index

Annual house price growth eased again in May to 3.3%, after reaching a recent peak of 10% in March 2016, according to the latest Halifax House Price Index.


House prices in the three months to May averaged at £220,706 – 3.3% higher than in the same period of 2016 but the lowest annual rate since May 2013.


There has been virtually no change in prices over the past three months with a rise of 0.4% between April and May but a decrease of 0.2% on the preceding quarter.

“The drumbeat of a slowing market is getting steadily louder. But with the monthly price change still in positive territory in May, it’s an open question whether we’re seeing a stumble or a stagnation,” said Jonathan Hopper, managing director of Garrington Property Finders.


“There are two factors behind the slowdown. The cooling effect unleashed by the snap election announcement was instant but is likely to be temporary. But the longer-term issue is more worrying – falling real wages are eroding buyer confidence and squeezing affordability.


“For too long the gap between house price growth and wage growth has been a gulf. This was unsustainable and it was inevitable that prices would ease, especially in the areas where they had been rising fastest.


“But nothing puts the brakes on the housing market more than the sense that prices may ease in future. Would-be buyers are quick to sit on their hands if they think waiting could save them money.”


There has been a drop in UK home sales, which fell by 3% between March and April, to 99,910, following three successive months when sales were above 100,000. Nonetheless, sales in the three months to April were 2% higher than in the preceding three months.


The volume of mortgage approvals for house purchases fell by 2% between March and April, to 64,600. Approvals have been in a narrow range between 64,600 and 68,600 per month over the past six months; indicating that homes sales are unlikely to change significantly over the next few months.


Supply remains very low, with the number of properties coming on to the market falling for the 14th consecutive month in April.


“The lack of supply remains chronic, with the RICS reporting a 14th consecutive fall in the number of properties coming on the market in April. Ordinarily this would prop up prices, and in some areas we are still seeing stiff competition among buyers for good properties,” said Hopper.


“Election uncertainty is far from the only issue facing the property market, but if Friday morning brings a clear result there’s a good chance the market will ease past its current speed bump.


“A dose of clarity is what is needed to free up more supply and spur discretionary buyers back into action.” 



But there has been a rise in private sector housebuilding, with private enterprise new build housing completions 12% higher in the first quarter of 2017 than in the previous quarter. In contrast, completions by housing associations were 5% lower.


All completions are 57% above the trough in 2013 Quarter 1, but remain 18% below their 2007 Quarter 1 peak.


 “The fact that the supply of new homes and existing properties available for sale remains low, combined with historically low mortgage rates and a high employment rate, is likely to support house price levels over the coming months,” said Martin Ellis, Halifax housing economist.


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