House prices enjoy ‘bounce back’

p22571UK-News-10-1

Published: Thursday 5th February 2015 by The News Editor

Comments (0)

House prices “bounced back” in January with average values lifting to the highest levels seen since 2008, Halifax has reported.

Prices across the UK increased by 2% month-on-month to reach £193,130 typically, which is the largest average value in cash terms seen since February 2008, Halifax said.

The 2% uplift is the strongest monthly increase seen for January since 2009. House prices in the three months to January were also 1.9% higher than they were during the preceding three months, marking the first time the quarterly change has accelerated since July last year.

The year-on-year measure of house price change also grew stronger, with prices increasing by 8.5% annually in January, up from a 7.8% annual increase recorded in December, although this is still below a recent peak of 10.2% year-on-year growth seen last July.

Martin Ellis, housing economist at Halifax, said the “bounce back” in house price growth may indicate that falling mortgage rates, an overhaul of stamp duty which has made the tax cheaper for many buyers, and the first real increases to earnings for several years are providing a modest boost to the market.

But he cautioned: “It is, however, too early to draw any firm conclusions. The monthly figures in January can be particularly volatile due to lower volumes of activity at this time of year and there have been unusually large rises on occasion in the past.”

The latest figures add to recent evidence that the housing market is starting to turn around after showing signs of cooling towards the latter half of 2014.

The Bank of England recently reported that the number of mortgage approvals made to home buyers increased in December for the first time in six months.

The strength of the housing market recovery took many commentators by surprise last year, with a stream of would-be buyers flooding into the market on the back of mortgage schemes such as Help to Buy and growing confidence in the economy generally.

Stricter mortgage rules, which came into force in April, and a changing mood among house-hunters as they grew more cautious in the face of some of the prices sellers were demanding, were said to be behind the cooling in the recovery which was seen in the latter part of 2014.

Some experts have suggested that the looming general election could result in some people who plan to buy or sell a home this year bringing their plans forward into early 2015 in order to avoid the uncertainty of the outcome.

Halifax has said that it expects prices across the country to grow by between 3-5% across 2015, compared with a stronger 8% upswing last year.

Mr Ellis continued: “Housing demand should continue to be supported by an expanding economy, continuing low mortgage rates and a boost to households’ spending power resulting from lower consumer price inflation and reduced fuel bills.

“Nonetheless, we expect the overall downward trend in house price growth seen last summer to continue over the coming months.”

Halifax pointed to recent reports from the Royal Institution of Chartered Surveyors (Rics) which have found that the supply of homes on the market remains tight. This is will help to keep house prices up, despite signs that demand from house hunters is weakening, as the tight supply means that would-be buyers have a lack of homes to choose from.

Howard Archer, chief UK and European economist for IHS Global Insight, said: “The overall evidence strongly points to house prices being reined in significantly in recent months by a marked weakening in housing market activity compared to the early months of 2014.

“We have little doubt that the spike in house prices in January reported by the Halifax is an outlier.

“Nevertheless, we do suspect that the weakness in housing market activity may be bottoming out and we see activity picking up to a limited extent in 2015 from current levels.”

Published: Thursday 5th February 2015 by The News Editor

Comments (0)

Local business search