Jun 10

Halifax: Second quarter of house price increases

House prices in the latest three months (March 2014-May 2014) were 2.0% higher than in the preceding three months (December 2013-February 2014). 

House price change on this measure has now remained steady in a narrow range of 1.9% – 2.3% since June 2013.

Prices in the three months to May were 8.7% higher than in the same three months a year earlier. This was marginally higher than in April (8.5%).

After falling in the previous two months, average price increased by 3.9% in May – this was the third monthly price rise since January. Monthly movements, however, can be volatile and the quarter on quarter change is a more reliable indicator of the underlying trend.

Home sales edged down by 1% in April to 103,690, however, transactions are still a third higher than in April 2013. Annually, transactions grew to 1.142 million in the year to March 2014 – a rise of 23% from the same period a year earlier (Source: HMRC, seasonally-adjusted figures.)

The growing difference between housing demand and supply continues to be a key driver of house price increases. Growth in new buyer enquiries have remained steady so far this year while the number of homeowners providing instructions to put their property on the market for sale declined for the fourth consecutive month. (Source:  RICS) However, latest housebuilding figures show signs of improvement which could help to bring demand and supply into better balance. The number of private housing starts in England in the year to March 2014 increased by 34% to 108,400 from a year earlier.  (Source: CLG)

Commenting, Stephen Noakes, Mortgages Director, said:

“House prices in the three months to May were 2.0% higher than in the three months to February. The quarter on quarter price change is a more reliable indicator of the underlying trend compared to the monthly price movement. Annually prices were 8.7% higher in the three months to May than in the same three months last year.

“On an annual basis housing demand is still strong and continues to be supported by a strengthening economic recovery.  Consumer confidence is being boosted by a rapidly improving labour market and low interest rates, although growth in average earnings still remains weak.

“However, there are signs of a revival in housebuilding which should bring supply and demand into better balance and curb upwards pressure on prices over the medium and longer term.”