Halifax reports slowdown in rate of house price growth

Posted 9 September 2016 by Ben Salisbury

The latest Halifax house price index shows house prices fell by 0.2% between July and August and the annual rate of growth dipped to 6.9%...

House prices in the UK rose by 0.7% in the three months to the end of August, signalling a slowdown in the growth of house prices, according to the latest Halifax house price index.

This quarterly growth rate is the lowest since December 2014 when it was 0.5% and down from 1.5% in July.

On an annual basis house prices are 6.9% higher than in the same three months of 2015, down from 8.4% higher in July and continuing the downward trend seen since March when the annual rate of house price growth reached 10%. This is the lowest annual growth rate since October 2013, which was also 6.9%.

House prices fell by 0.2% between July and August, but this small drop is the lowest monthly dip of the four monthly falls so far this year.

Martin Ellis, Halifax housing economist, said: "House price growth continued the trend of the past few months in August with a further moderation in both the annual and quarterly rates of increase. There are also signs of a softening in sales activity.

“The slowdown in the rate of house price growth is consistent with the forecast that we made at the end of 2015. Increasing difficulties in purchasing a home as house prices continued to increase more quickly than earnings were expected to constrain demand, curbing house price growth.”

The number of sales also fell slightly in July, down by 1% following increases in the two months before.

However, Halifax said sales volumes have been heavily distorted in recent months by the introduction of higher stamp duty tax rates for buy to let and second home purchases in April.

Mortgage approvals were also down for the second consecutive month. The volume of mortgage approvals for house purchases fell by 5% between June and July, down to 60,912, the lowest since January 2015. New instructions to sell also dipped for the fifth consecutive month which contributed to a drop in the stock of homes available for sale, which is close to record low levels.

Halifax’s HPI is just one of a number of reports and is in contrast to Nationwide’s which reported a 0.6% rise in August after a 0.5% increase in July. It’s year-on-year figures reported house price increases of 5.6% in August and 5.2% in July.

Howard Archer chief UK and European economist at IHS Global Insight said: “With the economy currently showing resilience following June’s Brexit vote, we now expect house prices to be essentially flat over the final months of 2016. However, we still believe that a dip in house prices is likely in 2017, probably by around 3-5%.

“However, it is very possible that the downside for house prices will be limited markedly by a shortage of houses for sale.”

House prices fell in January
14 February 2017
House prices fell by 0.9% in the first month of 2017, according to the latest Halifax house price index, taking the average cost of a house to £2...Read more
House deposit
16 January 2017
Saving for a deposit for first-time buyers is a challenge as house prices rise faster than earnings. WhatHouse? offers 10 tips to help you reach ...Read more
House prices went up 0.1% in October
14 December 2016
The latest official figures on house prices show variations in the UK with the East of England showing the biggest rise but prices in central Lon...Read more

Click here to see your activities