House price growth is running at around a third of the levels seen in spring last year, according to an index. More House price growth is running
House price growth is running at around a third of the levels seen in spring last year, according to an index.
Property values increased by 3.3% annually in May, the lowest annual rate since a 2.6% increase in May 2013, Halifax said.
The 3.3% increase is around a third of a 10% rise in March last year.
There has been “virtually no change” in house prices over the last three months, Halifax said. Property values increased by 0.4% month-on-month in May, to reach £220,706 on average across the UK.
Martin Ellis, a housing economist at Halifax, said: “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.”
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said May’s Halifax data should allay concerns that house prices are on a downward spiral.
He said: “Admittedly, average prices still are 0.7% below their December 2016 peak, but Halifax hasn’t reported a month-to-month decline in prices since January.
“Recent further falls in mortgage rates are helping home buyers to take out slightly larger loans, even though their real wages are falling.
“In addition, prices are being underpinned by a sharp reduction in supply. The extremely low rate of job losses means that few home owners are being forced to sell their homes and many are deciding to delay listing their homes until the market strengthens again.
“So, while the days of rapid house price growth fuelled by sharp increases in leverage are over, we still see scope for prices to edge up over the rest of 2017.”
Halifax pointed to recent HM Revenue and Customs (HMRC) figures showing sales fell by 3% between March and April.
It said Bank of England figures have shown the volume of mortgage approvals for house purchase – indicating completed sales – fell by 2% between March and April.
Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said: “The Halifax figures are interesting as they reinforce findings from other recent surveys, suggesting that we should be concentrating not just on increasing supply of new homes but encouraging existing home owners to move.
“Buyers and sellers have been in limbo recently with the market awaiting more certainty from the General Election and Brexit negotiations.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “There has been quite a bit of repricing downwards on mortgage deals in the past week, with Accord, Virgin Money, Platform, New Street and Tesco all cutting rates.
“Lenders are keen to lend and with the mortgage market oversupplied in all areas, pricing is likely to remain competitive for the foreseeable future. This is particularly good news for borrowers who are coming up to remortgage.”