The Halifax has released the house price figures for the month of May and not surprisingly, these show a major dip. In fact Halifax said that house price growth has fallen to its lowest rate in four years.
The figures reveal that the prices fell by about 0.6 percent in May; this makes it an overall drop of 0.1 percent in 2005, Halifax said. The yearly house price inflation was pegged at 5.7% in May, this is again the lowest since May 2001 and way below the high of 22.1% reached in July last year. According to Halifax, the house price index shows that the market is operating in a narrow band with hardly any movement in the prices this year. Halifax added that the average house price for the month of May was £162,411. This is down from the £163,458 achieved in April, but was still more than five times the average salary, Halifax reported.
Philip Shaw, an economist at Investec, commented on these figures by saying, "The latest Halifax numbers show the third monthly fall in four months and this suggests that there is a risk of a further weakening. The Bank of England is already factoring in weakness in the housing market with modest falls, so it need not necessarily trigger a rate cut this year." But there are sure signs that the market is stabilizing, with the Bank of England reporting a rise in April in the number of mortgages approved for house purchase. These figures released by the BoE have been up for three consecutive months. Estate agents have also confirmed that the market is on the way up, but that sales were around 30 percent lower than what they were a year ago.
Tim Crawford, group economist at Halifax, said, "The annual rate of house price inflation was 5.7% in May and has fallen from 22.1% last July. It is now at the lowest rate since May 2001 and is likely to fall further over the coming months given the large monthly increases in the middle of 2004. We continue to forecast a modest decline of 2% in house prices this year across the UK. The market is underpinned by sound fundamentals including record employment levels, good affordability and rising real earnings."
These figures released by Halifax can be contrasted with those released by Nationwide building society last week; those figures had shown a 0.3 percent increase in house prices in May, and a year-on-year rise of 5.5 percent.
Comparing these two surveys, Howard Archer, chief UK economist at consultancy Global Insight, said, "Significantly, the two surveys provide a consistent picture in terms of annual house price inflation with Halifax showing this down to a four-year low of 5.7% in the three months to May, and Nationwide showing it at 5.5% in May. We continue to believe that the housing market will avoid a sharp correction, although we acknowledge that there is a risk of this should the economy slow markedly, and unemployment starts to rise significantly over the coming months. Instead, we forecast that there will be an extended period of relatively subdued housing market activity and soft prices."
Posted
on : Tue, 07 Jun 2005 21:20 GMT | Mortgages News
By : Chris Rowe
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