Halifax: Confidence returning to the market

Posted on Monday, June 10, 2019

The latest data and analysis from Halifax has revealed that average house prices in May edged up to £237,837 - a rise of 0.5% on the month as the first signs of stability return to the market.

May’s annual change figure of 5.2% comes against the backdrop of a particularly low growth rate in the corresponding period in 2018, which has had an impact on year-on-year comparisons.

HMRC Monthly data shows UK home sales remaining steady. April saw 99,420 home sales which is close to the 5 year average of 101,249 and follows a similar result in March. Sales in February to April fell 0.2%, against the levels in November to January. April home sales were flat against the previous 12 month average of 99,322.

Mortgage approvals rise back above the 12 month and 5 year averages. Bank of England industry-wide figures show that the number of mortgages approved to finance house purchases – a leading indicator of completed house sales – rose 5.9% in April to 66,261. The April rate is just above the 5 year average monthly approval rate of 66,066, and is 1,118 above the previous 12 month average of 65,143. While this is a notable change on a monthly basis, the approval level is still very close to the longer term averages.

Demand for and supply of housing remains subdued for another month. The RICS UK Residential Market Survey again showed a subdued result for nearly every measure. The sales to stock ratio dropped slightly to 30.7% and is, as last month, at its lowest rate since September 2013. Price expectations and sales expectations showed a small improvement, for the third month running, but both expectations remain firmly negative.

Russell Galley, Managing Director, Halifax, said: “We saw a slight increase in house prices between April and May, but the overall message is one of stability. Despite the ongoing political and economic uncertainty, underlying conditions in the broader economy continue to underpin the housing market, particularly the twin factors of high employment and low interest rates.

This is supported by industry-wide figures which suggest no real change in the number of homes being sold month to month, while Bank of England data show the number of mortgages being approved rose by almost 6% in April, reversing the softness seen in the previous month.

While current conditions may help those looking to make their first move onto the property ladder, existing homeowners will doubtless be considering long-term house price growth which continues to look subdued in comparison to recent years.

Looking ahead, we expect the current trend of stability based on high employment and low interest rates to persist over the coming months, though clearly any downturn in the wider economy would be keenly felt in the housing market.”

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