Annual House Price Growth Eased to 2.6% in June

Annual House Price Growth

Annual House Price Growth Eased to 2.6% in June

Annual house price growth flattened to 2.6% in June, according to the latest House Price Index from Halifax.

Prices in the three months to June were 2.6% higher than in the same three months a year earlier. This was lower than in May (3.3%) and is the lowest annual rate since May 2013 (2.6%).

On a quarterly basis, average house prices in the past three months (April to June) were 0.1% lower than the previous quarter (January to March). This was the third successive quarterly fall – the first time this has happened since November 2012.

Nationally, house prices in June 2017 were 9% above their August 2007 peak. The average house price of £218,390 is £63,727 (41%) higher than its low point of £154,663 in April 2009.

First time buyers

The number of first-time buyers (FTBs) reached an estimated 162,704 in the first half of 2017, only 15% below the peak in 2006 (190,900), according to the latest Halifax First Time Buyer Review.

The number of new buyers is up from 154,200 in the same period in 2016 and more than double the market low in the first half of 2009 (72,700).

This is the third time in four years FTB numbers have exceeded 150,000 – the first time since 2007. 47% of all house purchases financed by a mortgage were made by FTB, compared to 36% a decade earlier.

Housing Activity

UK home sales edge down. Sales fell by 3% between April and May, to 100,170. However, sales have exceeded 100,000 in five successive months for the first time since March 2016. Overall, sales in the three months to May were 1% higher than in the preceding three months.

Mortgage approvals

The volume of mortgage approvals for house purchases – a leading indicator of completed house sales – edged up by 0.2% between April and May, to 65,200. This is the first increase since January having fallen between February and April.

Approvals remain in a narrow range between 65,200 and 68,600 per month over the past eight months; indicating that homes sales are likely to remain steady over the coming months.

Halifax believes that household finances are coming under pressure with inflation higher than wage growth and this development is likely to have weakened market activity.

Housing supply

The supply of homes for sale remains very low. New instructions for home sales fell for the 15th consecutive month in May, while the average stock levels on estate agents’ books are now at an all-time low.

Martin Ellis, Halifax housing economist, said:

“House prices have flattened over the past three months. Overall, prices in the three months to June were marginally lower than in the preceding three months. The annual rate of growth has fallen, to 2.6%; the lowest rate since May 2013.

“Although employment levels continue to rise, household finances face increasing pressure as consumer prices grow faster than wages. This, combined the new stamp duty on buy to let and second homes in 2016, appears to have weakened housing demand in recent months.

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