Halifax finds ‘some buoyancy’ returning to property market

UK house price growth unexpectedly picked up in August, taking the average price of a home to a new record, according to the latest Halifax index.

Employment figures believed to be affecting house prices

After a slowdown in price rises in July, growth rose to 1.1 per cent, month-on-month, in August, bringing the average home price across the country to £222,293, beating the peak reached in December last year.Annual price growth in August stood at 2.6 per cent, up from 2.1 per cent in July but still only about a quarter of the rate recorded in spring 2016.Russell Galley, managing director of Halifax Community Bank, said, “Recent figures for mortgage approvals suggest some buoyancy may be returning, possibly on the back of strong recent employment growth, with the unemployment rate falling to a 42-year low.“However, wage growth is still lagging increases in consumer prices, which is likely to add pressure on household finances and increase affordability challenges for some buyers. House prices should continue to be supported by low mortgage rates and a continuing shortage of properties for sale over the coming months.”Alex Gosling, chief executive of online estate agents HouseSimple.com, described the Halifax index as suggesting it was now “full steam ahead for the UK property market”, adding, “House prices have bounced back strongly since June when the country was suffering from post-general election malaise.“And this is the first month this year that average price growth has exceeded one per cent. It sets the housing market up nicely for a strong end to the year.“Although price growth might be slightly skewed by the fact July and August are traditionally quieter months for mortgage approvals, it still doesn’t take away from the fact that house prices have responded positively after a torrid few months of political battering.“We are now about to enter a critical time for the market, though, and September could make or break the market. Property supply still remains critically low and although it has helped to prop up house prices, it’s not a healthy position in the longer term.”

House market back on solid ground

Jonathan Hopper, managing director of Garrington Property Finders, commented, “After months of uncertainty the property market is slowly finding its feet again. But price rises are being driven by equilibrium rather than energy. The chronic shortage of supply has placed a floor under prices, while demand has been underpinned by a combination of benign interest rates and a robust jobs market.“Buyer sentiment in many areas remains upbeat, even if few are rushing and most won¹t hesitate to walk away from a property being offered at anything other than a highly competitive price. The result of this stand-off has been a gradual softening of prices rather than a correction.“Most encouragingly, on the front line we¹re seeing the market become more free-flowing and the typical summer hiatus in activity was short-lived.“The market remains deeply fragile, but the listless limbo that followed the election result is fading as increasing numbers of previously hesitant buyers are piqued into action by the sense that stability – if not quite normality – is returning.”Jonathan Samuels, CEO of property Octane Capital, said that, with supply so low, sentiment holding firm because of the strength of the jobs market and “stupendously” competitive mortgage rates, it was no surprise that the property market was “hanging in there”.

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He added, “For every negative, such as stubbornly high inflation, low wage growth and political uncertainty, there is a positive, and that’s balancing things out.“Even though the Halifax data demonstrates an underlying resilience in prices and the market, it’s unlikely to be the beginning of a material bounce-back.“The property market is still a shadow of its former self and we are likely to remain in a sideways-moving market while various macro-economic and political factors play out. There’s every chance we’ll have much of the same for the rest of the year and into 2018.”Ewen Bunting, head of sales at estate agents James Pendleton, pointed out that the housing market was now level pegging with inflation with limited supply remaining a major driver.“It was only in July that inflation gained the upper hand. Homeowners began to see the cost of everything they buy going up quicker than the price of their house but this battle isn’t over yet,” he said.“Nationally, we’re now facing a year and a half straight of falling instructions. There just hasn’t been enough choice out there, and among those who simply need to buy and have the means, there’s no option but to meet seller demands.“In London though, we’re seeing positive signs of supply rising, bucking the national trend in a market that often acts as a bellwether for the country as a whole.”For related news and features, visit our Residential Property section.Access hundreds of global services and suppliers in our Online Directory  Get access to our free Global Mobility Toolkit

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